Mensclothing 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 3,000 Units Direct materials Direct labour Equipment depreciation Indirect labour Indirect materials Rent and insurance $75,000 36,000 5,000 3,000 2,000 18,000 Actual Amounts at 3,800 Units $90,000 48,000 5,000 4,000 3,000 19,000 Instructions: a. Prepare a static budget report for Mensclothing Company for the year. (5 marks) Cost Actual costs at 3,800 units Budgeted Static Budget costs at 3,000 Variances units $75 000 S90,000 Direct materials Instructions: a. Prepare a static budget report for Mensclothing Company for the year. (5 marks) Cost Static Budget Variances Actual costs at 3,800 units Budgeted costs at 3,000 units $75,000 36,000 5,000 $90,000 48,000 5,000 Direct materials Direct labour Equipment depreciation Indirect labour | Indirect materials Rent and insurance 3,000 2,000 18,000 4,000 3,000 19,000 b. Prepare a flexible budget report for MensClothing Company for the year. (10 marks) Variances Variances Budgeted costs at 3,000 Flexible Budget at actual activity level Actual costs at 3,800 units b. Prepare a flexible budget report for Mens Clothing Company for the year. (10 marks) Variances Variances Flexible Budget at actual activity level Actual costs at 3,800 units Budgeted costs at 3,000 units $75,000 36,000 5,000 3,000 2,000 18,000 $90,000 48,000 5,000 4,000 3,000 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) 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 disadvantages of the static budget? Briefly explain