How do you prepare a flexible overhead cost budget for the following production levels: 6,000 units, 8,000 units, and 10,000 units.

Comment on how a company's fixed costs vs variable costs could impact these budgets.

The Flexible Budget provides information to be used to complete a flexible budget for a manufacturer. Prepare the budget for the indicated levels. Recalculating the budget for three activity levels will emphasize the usefulness of computers in preparing budgets.

FLEXIBLE BUDGETS

Mars Corporation incurs the following overhead costs to manufacture its product:

Indirect materials..................................$2 per unit

Indirect labor.........................................$1.50 per unit

Supervisory salaries.............................$84,000 per month

Depreciation of

plant and equipment........................$58,000 per month

Utilities..................................................$3,000 per month +

$0.25 per unit