For the year GEM Associates projected that it would generate $2,000,000 of revenues; it actually generated $1,800,000.The company has consulted with you for help in understanding what is happening.You decide to address the following items.

Required:

a)What are the major weaknesses in the report above? (2 marks)

b)Recast the report (using a flexible budget instead of the static one presented) to enable a more meaningful way to enable cost control evaluation. (4 marks)

c)GEM Associates uses a management by exception philosophy.Use the report you prepared in (b) above and explain which costs are likely to receive additional investigation. (2 marks)