Flexible-budget preparation and analysis. Pollard Management Printers, Inc., produces luxury checkbooks with three checks and stubs per page. Each checkbook is designed for an individual customer and is ordered through the customers bank. The companys operating budget for August 2018 included these data: Number of checkbooks 15,000 Selling price per book $ 20 Variable cost per book $ 8 Fixed costs for the month $154,000 The actual results for August 2017 were as follows: Number of checkbooks produced and sold 17,000 Average selling price per book $ 20 Variable cost per book $ 7 Fixed costs for the month $156,000 The executive vice president of the company observed that the operating income for August was much lower than anticipated, despite a higher-than-budgeted selling price and a lower-than-budgeted variable cost per unit. As the companys management accountant, you have been asked to provide explanations for the disappointing September results. Bank Management develops its flexible budget on the basis of budgeted per-output-unit revenue and per-output-unit variable costs without detailed analysis of budgeted inputs. Required: 1. Prepare a static-budget-based variance analysis of the August performance. 2. Prepare a flexible-budget-based variance analysis of the August performance. 3. Why might Bank Management find the flexible-budget-based variance analysis more informative than the static-budget-based variance analysis? Explain your answer. ****REMEMBER: LEVEL 2 FLEX BUDGET VARIAINCES DONT HAVE A VARIANCESALES VOLUME VARIANCES MAY OR MAY NOT. ****REMEMBER TO INDICATE WHETHER YOU CALUCUATIONS HAVE A FAVORABLE (F) OR UNFAVORABLE (U) VARIANCE. Question 1: Variance Analysis for Bank Management Printers for September 2017--Level 1 Analysis (19 points). Actual Results (1) Static-Budget Variances (2) = (1) (3) Static Budget (3) Units sold Revenue ________ _________ ______ ________ _______ _________ Variable costs _________ ________ _________ Contribution margin Fixed costs Operating income _________ _________ _________ ________ ________ ________ _________ _________ _________ $ Total static-budget variance Question 2: Level 2 Analysis (15 Points, point per calculation) Actual Results (1) Flexible- Budget Variances (2) = (1) (3) Flexible Budget (3) Sales Volume Variances (4) = (3) (5) Static Budget (5) Units sold _______ 0 ______ ______ ________ Revenue _________ ________ ________ ________ ________ Variable costs ________ ________ ________ ________ ________ Contribution margin ________ ________ ________ ________ _______ Fixed costs ________ ________ ________ 0 _______ Operating income $ ______ $ ______ $ ______ $ ______ $ -______ $ $ Total flexible-budget Total sales-volume variance variance $ Total static-budget variance Question 3: Level 2 written/observed Analysis (5 points): ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ______________________________________________________________________