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This question will be sent to your instructor for grading. Item1 5 points eBookPrintReferencesItem 1 Deriving a Flexible Budget Picture Maker is a freestanding photo kiosk consumers use to download their digital photos and make prints. Shashi Sharma has a small business that leases several Picture Makers from the manufacturer for $120 per month per kiosk, and she places them in high-traffic retail locations. Customers pay $0.18 per print. (The kiosk only makes six- by eight-inch prints.) Sharma has one kiosk located in the Sanchez Drug Store, for which Sharma pays Sanchez $80 per month rent. Sharma checks each of her kiosks every few days, refilling the photographic paper and chemicals, and collects the money. Sharma hires a service company that cleans the machine, replaces any worn or defective parts, and resets the kiosk's settings to ensure the kiosk continues to provide high-quality prints. This maintenance is performed monthly and is independent of the number of prints made during the month. The average cost of the service runs about $90 per month, but it can vary depending on the extent of repairs and parts required to maintain the equipment. Paper and chemicals are variable costs, and maintenance, equipment lease, and store rent are fixed costs. If the kiosk is malfunctioning and the print quality deteriorates, Sanchez refunds the customer's money and then gets his money back from Sharma when she comes by to check the paper and chemical supplies. These occasional refunds cause her variable costs per print for paper and chemicals to vary over time. The following table reports the results from operating the kiosk at the Sanchez Drug Store last month. Budget variances are computed as the difference between actual and budgeted amounts. An unfavorable variance (U) exists when actual revenues fall short of budget or when actual expenses exceed the budget. Last month, the kiosk had a net loss of $23, which was $87 more than budgeted. Sanchez Drug Store Kiosk Last Month Actual Results Variance from Budget (U = unfavorable F = favorable) Revenue $ 360 $ 108 U Expenses: Paper $ 65 $ 13 F Chemicals 28 2 U Maintenance 90 10 F Equipment lease 120 0 Store rent 80 0 Total expenses $ 383 $ 21 F Net income (loss) $ (23 ) $ (87 ) U Required: a. Prepare a schedule that shows the budget Sharma used in calculating the variances in the preceding report. b. How many good prints were made last month at the Sanchez Drug Store kiosk? c. Prepare a flexible budget for the Sanchez Drug Store kiosk based on a volume of 2,000 prints

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