LiveColor is preparing their 2019 budget. They estimate sales/production will be between 700,000 and 900,000 boxes of markers per month. LiveColor wants to look at both static budgets and flexible budgets to determine which is best for them. They have struggled in the past with determining whether budget variances were related to volume being above or below budget vs whether they are spending too much or too little on expenses. They want to be able to understand their budget variances in order to make better decisions.

d)Show the flexible budget cost formula(s) for LiveColor.

Question 2:The month of January 2019 is complete, and LiveColor wants to compare their budget to their actual results.Actual results are shown in the table above. (30 points)

a)Compare January's actual results to the static budget you created in Question 1a. Analyze the static budget variances by comparing the static budget to the actual results.

b)Break out price and volume variance amounts for each line item.

c)For the static budget variances, indicate whether each line item is favorable or unfavorable. Provide possible explanations.

d)Create the flexible budget based on the actual units produced for January.

e)Compare the actual results to the flexible budget for January that you created in Question 2d. Analyze the flexible budget variances by comparing the flexible budget to the actual results.

f)For the flexible budget variances, indicate whether each line item is favorable or unfavorable. Provide possible explanations.