In Chapter 08, we learned about Flexible Budgets.

Using the FLEXIBLE BUDGET sample in Chapter 08, , Section 8.1.2, Exhibit 8-3, as your guide, create a flexible budget with two levels of activity.

At a minimum, each level of activity in your budget should have: Sales, Variable Costs, Contribution Margin, Fixed Costs, Operating Income.

For the Year Ended December 31, 2025 Budget Amounts per Unit Units (Batches of 100) 48,000 50,000 52,000 Sales Revenue $ 7.50 $ 360,000 $ 375,000 $ 390,000 Variable Costs: Manufacturing: Direct Materials 1.75 84,000 87,500 91,000 Direct Labor 3.00 144,000 150,000 156,000 Variable Overhead 0.75 36,000 37,500 39,000 Selling and Administrative: Supplies 5% of sales 18,000 18,750 19,500 Total Variable Costs 282,000 293,750 305,500 Contribution Margin 78,000 81,250 84,500 Fixed Costs: 25,000 25,000 25,000 Manufacturing Selling and Administrative Total Fixed Costs 22,500 22,500 22,500 47,500 47,500 47,500 Operating Income $ 30,500 $ 33,750 $ 37,000