Here is the data that Vroom-Vroom used for their budgets:					Here are the Actual Results in December and January:
Monthly Budget Data:					Actual Data:		December	January
Selling Price per uniit:	$ 70.00	each			Production (Units)		375,000	150,000
Raw Materail Cost	$ 30.00	each			Revenue		$ 26,300,000	$ 10,300,000
Packaging Costs	$ 10.00	each			Raw Materials		$ 11,348,500	$ 4,485,000
Electricity	$ 3.00	each			Packaging Materials		$ 3,720,000	$ 1,445,000
Waste and Other Costs	$ 5.00	each			Electricity		$ 1,125,000	$ 460,000
Salary and Wages Costs	$ 450,000	per month			Waste and Other Costs		$ 1,888,000	$ 750,000
Fringe Benefits	50%	of Salaries			Wages		$ 500,000	$ 450,000
Rent Costs	$ 500,000	per month			Fringe Benefits		$ 250,000	$ 225,000
Insurance Costs	$ 70,000	per month			Rent		$ 500,000	$ 500,000
Depreciation Costs	$ 250,000	per month			Insurance		$ 70,000	$ 75,000
					Depreciation		$ 250,000	$ 240,000

Vroom-Vroom estimated sales/production will be between 100,000 and 300,000 cars per month. Their static budget is based on 200,000 cars sold per month. Assume that all units produced in a month are also sold in that month. Vroom-Vrooms unit of production/sale is a car (unit/each).

Question 3: Analyze the differences between static and flexible budgets. (28 points)

1. What is the difference between the static and flexible budgets?
2. What are the pros and cons for each - static and flexible budgets?
3. Write a letter to Vroom-Vrooms CFO. Explain the results in December and January. Provide your recommendation for either static or flexible budgets. Provide explanations and backup for your recommendation.