ACC72270 September 2020 Page of 35.00 QUESTION 3 (25 MARKS) Kayan Bhd (KB) manufactures a range of bicycle and sells to the retailen. KB has a budgetary control system to monitor revenue and costs in the effort to exercise control Due to the spike of pandemic covid-19, the company is budgeted to operate only of normal capacity, producing 65.000 units in the current year. The directions of KB pect that the company will be able to operate at 85% of its normal capacity. Therefore, actual sales volume was 85,000 units during the year. The standard Posts per unit of the product are RM Direct material Direct labor 56.00 Semi-variable manufacturing overheads 430 Fixed manufacturing overheads The variable manufacturing overhead included in semi-variable overheads is RM67.10 por unit. The selling price of the product is RM250. The fixed production onreats are allocated to the product on machine bour basis. A total of 19.500 standard machine hors were budgeted for 65,000 units. A total of 25,700 machine hours were actually wed during the year The following actual results for 85% capacity were obtained at the year RM RM Sales Less Cost of Sales Direct material 4316,000 Direct labour 4,675,000 Variable manufacturing overhead 3.187.500 Fixed manufacturing overhead 3811.000 15.991.500 Profit In order to ascertain the efficiency and effectiveness of cost performance, KB sa standard costing system. It compares the actual results with standards to find out discrepancies Hence the company will take corrective action. The management is coming to develop the flexible budget Required: a) Explain the importance of flexible budgets in performance managemene (4 marks) CLOL:PLOIC3) b) Prepare the flexible budget at the new level of activity 6 ks) CLOR:PLOI C4) ACCT22/0 Speler 2010 Page 4 c) Prepare a report showing the company's revenue and spending variances for the year (10 marks CLOSPLOI C4) d) Discus TWO (2) ways to prevent the behavioral problems from using standard code 15 mars (CLOL:PLOI.CS)