ABC company manufactures rivets in an automated factory. The company uses standard costing system to control costs & to assign costs to its inventory.

	Price Standard	Quantity Standard
Direct material	$3/ unit	16 meters/rivet
Direct labour	$11 per hour	3 hours per rivet

Variable overheads are estimated at $5.50 per rivet. Fixed overheads are $26,000 per month. The standard fixed overhead rate is based on an estimated production of 1,000 per month.

Required:

a. Prepare a production budget for the coming year based on a planned production of 12,000 rivets.

b. Compare the budget prepared in a) with a flexible budget based on actual productio of 15,000 rivets.