3 H 5 6 7 8 9 10 11 12 Question 3 (15 marks) Marvelous Mugs Ltd. (MM) had the following static budget and actual results for the previous you Management at MM is wondering if the negative variance is due to lower volume of poor.com control and inefficiencies. Complete the flexed budget and flexed budget variance below: Actual Results Flexed Budget Variance Flexed Badget Static Budget Units Sold 764 800 Sales Variable Costs Contribution Margin Fixed Costs Operating Income 36,672 16,044 20,628 12,698 7.930 13 14 IS 16 17 18 19 20 21 22 23 40 000 19200 20 80 12,740 8.960 1. Was poor cost control or inefficiencies the problem? 2. The total variance on operating income between actual results and the static budget is $130 unfavourable. a) How much of the variance is due to efficiency or cost controls? 24 25 b) How much of the variance is due to change in activity or units sold? 26 27 28