Coca-Cola Company provides the following budgeted and actual data for producing 20,000 units:
•Budgeted: Direct materials $400,000, Direct labor $300,000, Variable overhead $200,000, Fixed overhead $240,000
•Actual: Direct materials $410,000, Direct labor $310,000, Variable overhead $210,000, Fixed overhead $250,000
Required:
1.Prepare a flexible budget for 20,000 units.
2.Calculate the variances for direct materials, direct labor, variable overhead, and fixed overhead.
3.Provide possible reasons for the variances.