A company plans to produce 10,000 units in January and plans to spend $60,000 on direct materials, $50,000 on direct labour, and $20,000 on variable manufacturing overhead. They also plan to spend $10,000 on depreciation and $20,000 on salaries during the month.

During the month of January the company actually produces 13,000 units and spends $75,000 on direct materials, $66,000 on direct labour and $25,000 on variable manufacturing overhead. The fixed costs remained the same as the original budget.

Required (8 Marks)

A) Prepare the flexible budget variance report

B) What would the total variance have been if the company used a static budget instead of a flexible budget?

C) What are the benefits to using a flexible budget over a static budget?