4. Management Performance Reports At the end of 2019, Cyril Fedako, CFO for Central Products Pty Ltd, received a report comparing the budgeted and actual production costs for the company's segment plant in Forest Lake, Maputo: Manufacturing Costs Forest Lake Plant Budget versus Actual 2019 Budget Actual ($) ($) Difference (Actual Minus Budget) ($) Materials Direct labor 3,200,000 3,500,000 300,000 2,300,000 2,500,000 200,000 Supervisory salaries 475,000 500,000 25,000 Utilities 125,000 135,000 10,000 Machine maintenance 350,000 380,000 30,000 Depreciation of 90,000 90,000 -0- building Depreciation of 250,000 255,000 5,000 equipment Janitorial 220,000 235,000 15,000 Total $7,010,000 $7,595,000 $585,000 The CFO's first thought was that costs must be out of control since actual costs exceed the budget by a hooping $585,000. However, he quickly recalled that the budget was set assuming a production level of 60,000 units. As against this, the Forest Lake plant actually produced 65,000 units in 2019. Required a) Briefly explain the concept of differential costs as used in short decision-making. (3 marks) b) Given that production was greater than planned, should Cyril expect that all actual costs will be greater than budgeted? (3 marks) c) Which costs would you expect to increase, and which costs would you expect to remain relatively constant? (10 marks)