1. A brief overview of how the flexible budget was prepared and its purpose in variance analysis.

2. Tell the board of directors about the following variances. This explanation should include whether the variance is favorable or unfavorable, the amount of the variance, potential causes of these variances in relation to your cost object and the next steps you will take as manager to mitigate effects of unfavorable variances or optimize upon favorable variances. Each variance must be addressed.

a. Sales Volume Variance

b. Selling Price Variance

c. Direct Material Price & Quantity Variances

d. Direct Labor Rate & Wage Variances

e. Variable Indirect Price & Efficiency Variances

f. Fixed Indirect Price & Volume Variances

Price/Rate (AQxSPXACD) Flexible |Quantity/Efficien (AQxSPXSCD) Sales Volume (SQxSPXSCD) DIRECT COSTS & SALES (AQXAPXACD) Actuals Variance Budget cy Variance Flexible Budget Variance Traditional Unit sales 1000 0 1000 0 1,000 50 950 Sales revenue $800,000 $50,000.00 $850,000 $850,000 $ 42,500.00 $ 807,500.00 Direct Material $104,500 $5,500.00 $ 110,000.00 $ 10,000.00 $ 100,000.00 95,000.00 Direct Labor $233,280 $17,280.00 $216,000 $ 16,000.00 $200,000 190,000.00 (AQXPOHRXSCD) (AQXAOHRXACD) Price/Rate (AQXPOHRXACD) Efficiency (AQXPOHRXSCD) Production Indirect Costs INDIRECT COSTS Actuals Variance Flexible Budget Variance Flexible Budget Volume Variance Applied Variable Indirect Costs $83,000 $30,684.21 $113,684 $8,421.05 $105,263 $0 $105,263 Fixed Indirect costs $165,000 $15,000.00 $150,000 $0.00 $150,000 $ 7,894.74 $ 157,894.74