Plastic Products, LLC, manufactures plastic beverage bottles. The division that manufactures water bottles for the North American market has two plants that operate 24 hours a day, 365 days a year. The plants are evaluated as cost centers. Small tools and supplies are considered variable overhead. Depreciation and rent are considered fixed overhead. The master budget for a plant and the operating results of the two North American plants, North and South, are as follows:

Required
1. Prepare a performance report for the North plant. Include a flexible budget and variance analysis.
2. Prepare a performance report for the South plant. Include a flexible budget and variance analysis.
3. Compare the two plants, and comment on their performance.
4. Explain why a flexible budget should be prepared.

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Master Budget North Actual South Actual Center costs Caps ($0.004) Direcr labor ($0.002) Small tools and Plastic pellets ($0.009) S4,500,000 $3,880,000 $5,500,000 1,000,000 250,000 2,000,000 1990,000 2,000,000 865,000 ,240,000 supplies (S0.0005) Depreciation and ren Total cost 198,000 280,000 480,000 $8,200,000 S7,373,000 9,500,000 450,000 440,000 62,000 6 Bottles processed per r 69,450 Average daily pounds of scrap Bottles processed in millions) 70,250 500 450 520