Norland-Norge AS produces corporate notebooks. Each notebook is designed for an individual customer. The company's operating budget for September 2008 included these data:

Number of notebooks........................................ 15000

Selling price per book........................................ NKr 20

Variable costs per book........................................ NKr 8

Total fixed costs for the month NKr......................... 145000

The actual results for September 2008 were:

Number of notebooks produced and sold.................... 12 000

Average selling price per book................................. NKr 21

Variable costs per book.......................................... NKr 7

Total fixed costs for the month NKr........................... 150000

The managing director of the company observed that the operating profit for September was much less than anticipated, despite a higher-than-budgeted selling price and a lowerthan- budgeted variable cost per unit. You have been asked to provide explanations for the disappointing September results. Norland-Norge develops its flexible budget on the basis of budgeted revenue per output unit and variable costs per output 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 Norland-Norge find the Level 2 analysis more informative than the Level 1 analysis? Explain your answer.