Coca-Cola Company provides the following budgeted and actual data for producing 45,000 units:
•Budgeted: Direct materials $900,000, Direct labor $675,000, Variable overhead $450,000, Fixed overhead $540,000
•Actual: Direct materials $920,000, Direct labor $695,000, Variable overhead $470,000, Fixed overhead $550,000
Required:
1.Prepare a flexible budget for 45,000 units.
2.Calculate the variances for direct materials, direct labor, variable overhead, and fixed overhead.
3.Provide possible reasons for the variances.