i am being asked to do this in my assignment.

Assume the actual results for your products/services costs (i.e price of direct materials, direct labour and overheads) are 10% more than what you budgeted for in your individual assignments' master budget and the quantities are 5% (i.e sales level, quantity of materials used, etc) less to prepare the following for each subsidiary:

A static budget at budgeted sales.

A flexible profit and loss statement budget using actual sales level.

Actual profit and loss statement.

Calculate variances and investigate reasons for two of the most significant variances.

my question is for the actual profit and loss statement is it sales (like my budgets) or production that im basing my expenses and numbers off, for eg, i purchased extra materials for my ending inventory to produce a few more products than i will sell, or do i base the material costs and labour off of the sales number.

currently - 1046 budgeted production

1046 raw materials actually purchased

996 actual production

946 is actual sales

so what number do i use to base my material costs off of? im a bit confused