5. Suppose a chain o KFC ranchises in Shanghai had budgeted sales or 2012 ? RM 71 million where R stands or the Ch? se unit o currency, cia y te re min als called e uan Cost of good sold and ot er variable costs were expected to be 65% of sales. Budgeted annual fixed costs were RMB 1.4 million. A strong Chinese economy caused actual 2012 sales to rise to RMB 9.3 million and actual profits to increase to RMB 1,550,000. Fixed costs in 2012 were as budgeted. The franchisee was pleased with the increase in profit. 1. Compute the sales-activity varlance and the flexible-budget variance for Income for 2012. What can the franchisee learn from these variances? 2. Suppose that in 2013 the Chinese economy weakened, and the franchise's sales fell back to the RMB 7.1 million level. Given what happened in 2012, what do you expect to happen to profits in 2013