Coca-Cola Company provides the following budgeted and actual data for producing 25,000 units:
•Budgeted: Direct materials $500,000, Direct labor $375,000, Variable overhead $250,000, Fixed overhead $300,000
•Actual: Direct materials $510,000, Direct labor $385,000, Variable overhead $260,000, Fixed overhead $310,000
Required:
1.Prepare a flexible budget for 25,000 units.
2.Calculate the variances for direct materials, direct labor, variable overhead, and fixed overhead.
3.Provide possible reasons for the variances.