A company's master budget for October is to manufacture and sell 30,000 units for a total of $270,000 with total variable costs of $180,000 and total fixed costs of $24,000.The company actually manufactured and sold 32,000 units and generated $45,000 of operating income in October.The flexible-budget operating income in October is:

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The flexible budget adjusts the master budget for the actual level of activity. The flexible budget operating income is calculated as follows: Revenue for 32,000 units = (270,000/30,000) * 32,000 = $288,000. Variable costs for 32,000 units = (180,000/30,000) * 32,000 = $192,000. Fixed costs remain the same at $24,000. Therefore, flexible-budget operating income = $288,000 - $192,000 - $24,000 = $72,000.

A Company's Master Budget for October Is to Manufacture and Sell