Coola Vents Ltd has prepared a fixed budget performance report for the year ended 30 June 2025 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 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 72000 75200 3200 F $108.000 $120 320 $12320 U 39 600 41360 1760 U Repairs and maintenance 25 200 18800 6400 F Total variable overhead 172 800 180 480 7680 U Fixed costs: Insurance of factory 16600 24 600 8000 U Occupancy costs Depreciation 24800 25 400 20 700 20 700 Supervisory salaries 43 400 42 200 Total fixed overhead 105 500 112900 Total factory overhead $278 300 $293 380 600 U 1200 F 7 400 U $15080 U U indicates an unfavourable variance. F indicates a favourable variance.