Creative Ltd, is a medium size manufacturing company which is based in Adelaide. Variable overheads have been allocated of the basis of direct labour hours for the month of May. It was initially estimated that the company would consume 60,000 direct labour hours in May but in fact there was only 40,000 direct labours hours worked in May. You have been provided with the following information relating to month of May. Variable Overheads Overhead shift premium Inspection and quality control Repairs and maintenance Water Charges Total variable costs Actual Results $90,000 8,000 22,000 10,000 $130,000 Master Budget $100,000 10,000 30,000 5,000 $145,000 Required: 1. What is a flexible budget and what is it used for? (2 marks) 2. Prepare a flexible budget report for May overheads. The report should include price and volume variance for each overhead? (Show all calculations) (6 marks) 3. As a manager would you be concerned by the variances? (Hint briefly outline the meaning of the differences, if any) (2 marks)