1. Using the following per-unit and total amounts, prepare a flexible budget at the 12,000 unit, and 14,000 unit levels of production and sales for Earthen Products Inc.:

Selling price per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$ 75.00
Direct materials per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$ 24.00
Direct labor per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$ 8.00
Variable factory overhead per unit. . . . . . . . . . . . . . . . . . . . . . . .	$ 15.00
Fixed factory overhead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$75,000
Variable selling and administrative expense per unit . . . .	$ 12.00
Fixed selling and administrative expense . . . . . . . . . . . . . . . .	$80,000

Answers:

Flexible Budget
		12,000 Units	14,000 Units
Sales
Less variable costs:
Direct materials
Direct labor
Variable factory overhead
Variable selling and administrative expense
Total variable costs
Contribution margin
Less fixed costs:
Fixed factory overhead
Fixed selling and administrative expense
Total fixed costs
Operating income