Chapter 21, Problem 3QS

To determine

Flexible Budget:

Flexible budget is an integral tool to forecast the evolutions in the level of activities of business. Though the fixed costs portion of the flexible budget remains constant over a particular accounting period but to enforce changes in the budget according to the changes in the level of activities the variable costs undergo change in direct proportion to the same.
Flexible budget is very helpful for the management to plan costs and revenues with respect to the level of activities.

Expected level of incomes from operations if no. of units produced is expected to be 26,000 units.