It is currently Q4 2021 and Calbrex company is completing their budgeting process for 2022. Below is the information used to complete the budgets:

Expected Sales units:		Q1 12,000 units with a 15% increase each quarter
Ending raw materials inventory:		20% of the next quarters expected production requirements
Ending finished goods inventory:		35% of next quarter's expected sales units
Q4 Production Budget		11,863 units

Raw materials are expected to cost $15 per pound, and each unit of production is expected to use 4 pounds of raw materials. Required (10 Marks - show all steps) A) The Chief Operating Officer wants to know how much the company is planning to spend on Direct Materials for each quarter for the first 3 quarters of the year. Prepare the necessary calculations to answer this question.

B) In Q3 the company actually produced 14,000 units and spent $750,000 on direct materials purchases. Management wants to know what their flexible variance for direct materials was in Q3. Calculate this variance and discuss a few possible reasons for the favourable or unfavourable variance? C) Would a static budget or flexible budget be better for this company and why?