Coca-Cola Company provides the following budgeted and actual data for producing 50,000 units:
•Budgeted: Direct materials $1,000,000, Direct labor $750,000, Variable overhead $500,000, Fixed overhead $600,000
•Actual: Direct materials $1,020,000, Direct labor $770,000, Variable overhead $520,000, Fixed overhead $610,000
Required:
1.Prepare a flexible budget for 50,000 units.
2.Calculate the variances for direct materials, direct labor, variable overhead, and fixed overhead.
3.Provide possible reasons for the variances.