How to answer question 2 and 3? Thank you
Full variance analysis: variable costing Argus Electronics Limited manufactures and distributes transistors for electronics rms. In December 2014, Argus required a bank loan and the bank manager insisted that Tracy Miller, Argus's president, prepare a budget for 2015. In January 2016, Argus needed an additional loan and Miller asked her accountant to prepare a budget f0] 2016 to show the bank manager. Miller was concerned because Argus's prot for 2015 was considerably less than the 2015 budget gure given to the bank and she knew that the bank manager would want to know why. As a rst step in analyzing the differences, Miller copied the 2015 actual gures onto the 2015 bank budget form shown below and prepared the standard cost details shown below the budget form: ANCHORVALE ELECTRONICS LIMITED 2015 Budget Prepared for Bank Loan Dollars in (ooos) Static Budget Actual Variance Sales-units..........." 110.000 105,000 5000 U Sales-dollars...... $ 2,750 $ 2,520 $ 230 U Cost of sales: Materials. . 440 421 19F Labour. ..... 880 845 35 F Overhead .....................4. 220 205 15 F Fixed factory overhead... 300 303 30 1840 1,714 66F Gross profit ..... 910 746 164U Selling expenses Variable. ......." 220 Fixed 209 11P 100 102 20 Administration-fixed........... 200 197 3F 520 Profit before income tax. ..... 508 12 F Income tax (40% of profit before tax). ......... 390 238 152 U Net earnings.......... 156 95 61F $ 234 $ 143 $ 91U Standard Costs on Which Budget Is Based Standard per Unit Sales price...... Variable costs 242 Direct material .... ... $ 4 Labour, 12 hour at $16 per hour .......... Overhead, Y2 hour at $4 per hour ......... CO Fixed factory overhead: N Depreciation ..... $200,00Q Other ...... . 100,003 $300,000 Standard output . 100,000 units at 1/2 hour = 50,000 direct labour-hours ($300,000 : 50,000) x 12 hour . Selling expenses. Variable.. Fixed, $100,000 : 100,000 units ... .. . . .. . . . Administration: - N w Fixed, $200,000 : 100,000 units......... Standard costs were used for preparing bids, whereas the cost accounting system recorded actual costs1. :iedraft the budget to show the 2015 static budget, flexible budget, actual, and varianCes rom the fleXIble budget, with contribution margins separately identified. Note: See the standard cost details above. 2. Prepare a quantitative analysis to demonstrate to management the main causes for the variance from theilexible budget, as a basis both for taking corrective action and for explaining the variance from the static budget to the bank manager. 3. If expected 2016 operating results are similar to 2015, eXpiain to the bank manager how much of the loan you would be able to repay from 2016 earnings. (Assume no changes in accounts receivable and accounts payable) 4. It competition became intense in 2016 and Argus was operating well below capacity at 85,000 units, explain with calculations the minimum bid you would make on an order for 10,000 units. 5. What changes to the management accounting and reporting system for Argus Electronics would you propose
