Comprehensive Problem (Algo) LO 8-1, 8-2, 8-3, 8-4, 8-5, 8-6 The management of Perez Modems, Inc. (PMI) is uncertain as to the volume of sales that will exist in Year 1. The president of the company asked the chief accountant to prepare flexible budget income statements assuming that sales activity amounts to 5,000 and 9,000 units. The static budget is shown in the following form. Required a. Complete the following worksheet to prepare the appropriate flexible budgets. b. Calculate and show the flexible budget variances for the static budget versus the flexible budget at 9,000 units. c. Indicate whether each variance is favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).) PEREZ MODEMS, INC. Flexible Budget Income Statements Cost per Static Flexible Budgets unit Budget 7,000 5,000 9,000 Volume Variance Number of units Sales revenue $ 100 $ 700,000 Variable manufacturing costs: Materials 30 Labor 15 Overhead 4 210,000 105,000 28,000 42,000 315,000 6 Variable selling, general & administrative Contribution margin Fixed costs: Manufacturing rent Depreciation on manufacturing equipment Selling, general & administrative expenses Depreciation on administrative equipment Net income (loss) 61,000 71,000 89,000 23,000 $ 71,000 $(19,000) $ 161,000