It is currently Q4 2022 and Blacktrex company is completing their budgeting process for 2023. Below is the information used to complete the budgets:

Expected Sales units:January 35,000 units with a 20% increase each monthEnding finished goods inventory:40% of the next month's expected sales unitsEnding raw materials inventory:25% of the next month's expected production requirementsApril Production Budget65,318 units

Raw materials are expected to cost $5 per pound, and each unit of production is expected to use 8 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 month in Quarter 1 (Jan/Feb/Mar). Prepare the necessary calculations to answer this question.

B) In February the company actually produced 50,000 units and spent $2,220,000 on direct materials purchases. Management wants to know what their flexible variance for direct materials was in February. Calculate this variance and discuss a few possible reasons for the favourable or unfavourable variance? C) This company is looking to make a large $1,000,000 capital investment in Q2. One manager wants to use Profitability Index and another would like to use NPV to help them make the decision. Describe the difference between these two and why a company might choose one over the other.