1.Use the following data to create a planned operating budget for Hi-Lo Company for the year ending December 31, 2019:

Plant capacity 100,000 units Expected sales volume 90,000 units Expected production 90,000 units Actual production 90,000 units Forecasted selling price $12.00 per unit Actual selling price $13.50 per unit Manufacturing costs: Variable (per unit): Direct materials $3.60 Direct labor $1.50 Manufacturing overhead $2.25 Fixed manufacturing overhead $108,000 Selling and administrative expenses: Variable (per unit) $1.20 Fixed $60,000Sales $1,080,000 Cost of goods sold: Direct materials $ 337,500 Direct labor 135,000 Variable manufacturing overhead 202,500 Fixed manufacturing overhead 108,000 Total $ 783,000 Less: Ending inventory ($783,000 * 10/90) 87,000 696,000 Gross margin $384,000