Mesa Company's fixed budget for the first quarter of calendar year 2011 reveals the following. Prepare flexible budgets, following the format of Exhibit 8.3, that show variable costs per unit, fixed costs, and three different flexible budgets for sales volumes of 7,500, 10,000, and 12,500 units.
Sales (10,000 units)............................... $3,000,000
Cost of goods sold
Direct materials.......................... $320,000
Direct labor.............................. 680,000
Production supplies..................... 264,000
Plant manager salary.................... 60,000 1,324,000
Gross profit........................................ 1,676,000
Selling expenses
Sales commissions...................... 120,000
Packaging................................. 210,000
Advertising............................... 100,000 430,000
Administrative expenses
Administrative salaries.................. 80,000
Depreciation-office equip............... 30,000
Insurance................................... 18,000
Office rent................................. 24,000 152,000
Income front operations........................... $1,094,000