A company's master budget for October is to manufacture and sell 30,000 units, for a total sales revenue of $270,000, 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, to the nearest dollar, was:

$72,000

1. Budgeted contribution margin per unit = ($270,000 (given) ? $180,000 (given))/30,000 units (given) = $3.00/unit.

2. Flexible-budget operating income (based on actual production/sales volume in October) = budgeted total contribution margin based on actual sales volume ? budgeted fixed costs = (32,000 units × $3.00/unit) ? $24,000 = $72,000 (rounded to nearest whole dollar).