GRIM Company has a department that produces high quality leather cases for tablet computers. Material costs per case are budgeted at 11, and direct labour costs per case are budgeted at 5. The production manager is very happy about the following data for the recent month: Budgeted cost [] Actual cost [] Variance () Direct materials 77,000 72,000 5,000 F Direct labour 35,000 31,000 4,000 F Total 112,000 103,000 9,000 F The actual level of output was 5,800 leather cases. Required: a) Prepare a flexible budget-based analysis of the total direct materials costs and the total direct labour costs of the leather cases for the recent month. Show all workings. [10 marks] b) is the manager's happiness justified? Explain. [4 marks] c) Why are variance reports a useful tool of management? What are potential problems? Explain and discuss (4 marks)