5. Skelton Corporation had planned to produce 50,000 units of product during the first quarter of the current year. The company prepared the following budget on May 1:

	Budgeted (50,000 units)
Variable costs:
Direct materials used	$	36,000
Direct labor		45,000
Variable overhead		22,500
Fixed costs:
Manufacturing overhead		58,500
Total manufacturing costs	$	162,000
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During the first quarter, Skelton produced 60,000 units and incurred total manufacturing costs of $184,000.

For the 2 questions, below, asked, show your calculations to help explain your choice.

a. Which of the following amounts should not be included in Skelton's flexible budget at a 60,000-unit level? Explain the reasoning behind your choice

A) Direct materials used, $43,200

B) Direct labor, $54,000

C) Variable overhead, $27,000

D) Fixed manufacturing overhead, $70,200

b. A performance report for Skelton's first quarter of operations using a flexible budget approach would show:

A) Actual costs over budget by $1,300.

B) Actual costs over budget by $11,700.

C) Actual costs over budget by $15,150.

D) Total costs per the flexible budget of $194,400.