Coola Vents Ltd has prepared a fixed budget performance report for the year ended 30 June 2020 as follows.

Required

(a) Convert the fixed budget performance report prepared by Coola Vents Ltd to a flexible budget performance report.

(b) Explain why there is no variable overhead variance in the flexible budget for Coola Vents Ltd.
Does this mean that expenditure on variable overhead items is satisfactory?

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Units of production: Factory overhead: Variable costs: Indirect labour Factory supplies Budget Actual Variance 72 000 75200 3200 F $108 000 39 600 $120320 41360 $12320 U 1760 U Repairs and maintenance 25 200 18800 6400 F Total variable overhead 172 800 180480 7680 U Fixed costs: Insurance of factory 16 600 24600 8000 U Occupancy costs Depreciation 24 800 25 400 600 U 20 700 20 700 43 400 1200 F 105 500 42 200 112900 $293380 7 400 U $15080 U Supervisory salaries Total fixed overhead Total factory overhead $278 300 U indicates an unfavourable variance. F indicates a favourable variance.