Heat Fast Inc. (HFI) is a manufacturer of heating elements for toaster ovens. To improve control over operations, the president wants to Install a flexible budgeting system, rather than the single master budget being used at present. The following data are available for expected costs for production. The relevant range of production levels for fixed overhead costs is 80,000 to 180,000 units: Variable costs: Manufacturing Administrative Selling Fixed costs: Manufacturing Administrative Variable costs Manufacturing Administrative Selling Required: Prepare a flexible budget for each of the three sales levels: 116,000, 126,000 and 136,000 units. Each toaster oven is expected to sell for $22.40. Total variable costs Fixed costs Manufacturing Administrative $9.60/unit $5.25/unit $4.25/unit Total fixed costs Total costs Income from operations $ 194,900 $ 112,500 Heat Fast Inc. Flexible Budget Cost Formula (per toaster) $ 0.00 $ $ $ 110,000 Activity (toasters) 120,000 0 $ 0 $ 0$ 0 $ 0 $ 0 $ 136,000 0 0 4 21

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyz…