Burchard's Freight and Haulage is a small trucking company in northern New South Wales. Basic bookkeeping tasks have previously been performed by a person with minimal training. Because of the growth of the business you have recently been appointed as accountant. The company's manager, Bob Burchard, has prepared the following performance report for May. Burchard's Freight and Haulage Performance report for the month ending 31 May Actual Static Budget Variance Revenue from haulage 105 000 110 000 5 000 U less Variable expenses Fuel Vehicle maintenance Drivers' wages Other operating expenses 15 950 15 700 23 500 12 500 25 200 250 u 1 500 F 200 F 1 850 F 3 300 F 22 000 12 300 23 350 Total variable expenses 73 600 76 900 Contribution margin 31 400 33 100 1 700 U less Fixed expenses Depreciation on vehicles Cleaning Supervisory salaries Other operating expenses 2 700 900 8 100 2 600 100 U 800 8 000 9 900 100 U 100 U 11 600 1 700 U Total fixed expenses 23 300 21 300 2 000 U Net profit 8 100 11 800 3 700 U Required 1. Prepare a columnar flexible budget for Burchard's Freight and Haulage based on revenue levels of $90 000, $100 000 and $110 000. 2. What is the flexible budget equation? 3. Prepare a detailed perforhance report which will show activity volume variances and flexible budget varlances, item by item. 4. Although there are a number of favourable variances In Bob Burchard's report, actual net profit is only about 65% of budgeted net profit. Explain why this is so.