answer to the whole of question 7

Question 7 Equare ltd manufactures wristwatch batteries. The sales for wristwatch batteries have been deteriorating because of introduction of rechargeable watches. The managing director is disappointed with the last quarter results. The following table shows the static budget and actual performance for the last period. Additional Information - Direct material and direct labor costs are variable. - Machine operator expenses are step fixed. It expected on machine operator is required for every 3250 units manufactured. - Factory power costs have both a fixed and variable element. If the activity is 9,500 units the total power costs will be BWP9,975 - General expenses are a fixed cost. - Other production overheads have a variable cost of BWP0.80 per unit. Required: Prepare the company's flexible budget for the actual level of activity. Determine Favorable or Unfavorable Variances. [14 marks]