Lundell Inc. prepared a budget last period that called for sales of $120,000$ units at a price of $\backslash (\backslash$$ $20\backslash )$ each. The costs per unit were estimated to amount to $\backslash (\backslash$$ $12\backslash )$ variable and $\backslash (\backslash$$ $7\backslash )$ fixed. During the period, production was exactly equal to actual sales of $100,000$ units. The selling price was $\backslash (\backslash$$ $18\mathrm{.}00\backslash )$ per unit. Variable costs were $\backslash (\backslash$$ $11\backslash )$ per unit. Fixed costs actually incurred were $\backslash (\backslash$$ $800,000\backslash ).$

Required:

a$)$ Prepare a report to show the differences between the actual operating income, the operating income per the static budget, and the operating income per the flexible budget.

b$)$ Explain the significance of the comparisons.