Managerial Accounting E6-2 Preparing a flexible budget Adarmes Adventures manufactures aluminum canoes. In planning for the coming year, CFO Alexis King is considering three different sales targets: 2,500 canoes, 3,000 canoes, and 3,500 canoes. Canoes sell for $800 each. The standard variable cost information for a canoe is as follows. Direct materials 300 Direct labor 150 Variable overhead Utilities 35 Indirect material 30 Indirect labor 60 Total 575 Annual fixed overhead cost is expected to be: Maintenance 20,000 Depreciation 40,000 Insurance 37,000 Rent 30,000 Total 127,000
Required: Prepare a flexible budget for the three sales levels under consideration.