Flexible-budget preparation and analysis. Trustex Printers Inc. produces luxury cheque books with three cheques and stubs per page. Each cheque book is designed for an individual customer and is ordered through the customer's bank. The company's operating budget for September 2015 included these data:

Number of chequebooks.............15,000

Selling price per book...................$ 20

Variable costs per book..................$ 8

Total fixed costs for the month..$145,000

The actual results for September 2015 were

Number of chequebooks produced and sold.........12,000

Average selling price per book............................$ 21

Variable costs per book......................................$ 7

Total fixed costs for the month.....................$150,000

The executive vice-president of the company observed that the operating income for September was much less than anticipated, despite a higher-than-budgeted selling price and a lower-than-budgeted variable cost per unit. You have been asked to provide explanations for the disappointing September results. Trustex develops its flexible-budget-based budgeted revenue per output unit and variable costs per output unit without a detailed analysis of budgeted inputs.

Required

1. Prepare a Level 1 analysis of the September performance.

2. Prepare a Level 2 analysis of the September performance.

3. Why might Trustex find the Level 2 analysis more informative than the Level 1 analysis? Explain your answer.