Mens Clothing Company produces men's ties since 1995. In order to reasonably plan and closely control their manufacturing costs, they use the budgeting system. The following budgeted and actual amounts are released to top management for 2020 and they asked you, a cost accountant, to prepare a performance budget report so that they can analyze all type of variances including both favorable and unfavorable. Cost Budget at 5,000 Units Direct materials Direct labour Equipment depreciation Indirect labour Indirect materials Rent and insurance $175,000 236,000 8,000 54,000 29,000 19,000 Actual Amounts at 5,800 Units $213,000 245,000 8,000 62,000 33,000 20,000 a. Prepare a static budget report for Mensclothing Company for the year. (5 marks) Cost Static Budget Variance Budgeted costs at 5,000 units $175,000 236,000 8,000 Actual costs at 5,800 units $213,000 245,000 8,000 Direct materials Direct labour Equipment depreciation Indirect labour Indirect materials Rent and insurance 54,000 29,000 19,000 62,000 33,000 20,000 b. Prepare a flexible budget report for Mensclothing Company for the year. (10 marks) Variance Variance Actual costs at Flexible Budget at actual activity level 5,800 units Budgeted costs at 5,000 units $175,000 236,000 8,000 54,000 29,000 19,000 $213,000 245,000 8,000 62,000 33,000 20,000 c. Are there any problems identified in part (b) that top management and a production manager should be aware of? Briefly explain