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 favourable and unfavourable. Cost Budget at 5,000 Units Actual Amounts at 5.800 Units Direct materials $175,000 S213.000 Direct labour 236,000 245.000 Equipment depreciation 8.000 8.000 Indirect labour 54,000 62.000 Indirect materials 29,0001 33.000 Rent and insurance 20.000 19,000 Instructions: a. Prepare a static budget report for Mens Clothing Company for the year. (5 marks) Cost Budgeted costs Static Budget Actual costs at at 5.000 units Variance 5.800 units Direct materials $175,000 S213,000 Direct labour 236.000 245.000 Equipment depreciation 8,000 8.000 Indirect labour 54,000 Indirect materials 29.000 33.000 Rent and insurance 19,000 20.000 62.000 b. Prepare a flexible budget report for Mens Clothing Company for the year. (10 marks) Variance Flexible Budget Variance Actual costs at Budgeted costs at at actual activity 5.800 units 5.000 units level $175.000 $213.000 236,000 245,000 8.000 8,000 54,000 62,000 29,000 33.000 19,000 c. Are there any problems identified in part (b) that top management and a production manager should be aware of? Briefly explain. (5 marks) d. What are advantages of the flexible budget? Briefly explain