Flexed Budget (35 Marks) Dreams is an Engineering company producing a wide range of component parts for the aerospace industry. The production manager wishes to assess the change to the budget on the basis that 3,600 units are produced. Production Units Direct Materials Depreciation Electricity Maintenance Direct Labour Transportation 2,000 E 3,000 1,200 2,500 1,600 2,500 1,400 2,800 E 4,200 1,200 3,100 2,080 3,500 1,800 3,200 4,800 1,200 3,400 2,320 4,000 2,000 Required: i. Flex the budget for the actual activity level achieved during the period. (20 marks) The actual costs achieved during the period were: ii. Direct Materials Depreciation Electricity Maintenance Direct Labour Transportation 5,760 1,200 3,900 3,980 4,320 2,380 Calculate the variances from the budgeted figures calculated in (a) above (5 marks) Critically evaluate the possible reason(s) for the variances calculated above. (10 marks) Total : 35 marks