Midwest Ventilation, Inc., produces industrial ventilation fans. The company plans to manufacture 87,000 fans evenly over the next quarter at the following costs: direct material, $1,740,000; direct labor, $522,000; variable production overhead, $639,450; and fixed production overhead, $960,000. The fixed-overhead amount includes $84,000 of straight-line depreciation and $105,000 of supervisory salaries. Shortly after the conclusion of the quarter's first month, Midwest reported the following costs: Direct material $ 554,600 Direct labor 159,300 Variable production overhead 220,000 Depreciation 28.000 Supervisory salaries 37,600 Other fixed production 252,000 overhead Total $1,251,500 Dave Kellerman and his crews turned out 25,000 fans during the month-a remarkable feat given that the firm's manufacturing plant was closed for several days because of storm damage and flooding. Kellerman was especially pleased with the fact that overall financial performance for the period was favorable when compared with the budget. His pleasure, however, was very short-lived, as Midwest's general manager issued a stern warning that performance must improve, and improve quickly, if Kellerman had any hopes of keeping his job. Required: 2. Which of the two budgets would be more useful when planning the company's cash needs over a range of activity? O Flexible Budget O Static Budget 3. Prepare a performance report that compares budgeted and actual costs for the period just ended (i.e., the report that Kellerman likely used when assessing his performance). (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).) Static Budget: 29,000 Units Actual: 25,000 Units Variance Favorable None Unfavorable Total 4. Prepare a performance report that compares budgeted and actual costs for the period just ended (i.e., the report that the general manager likely used when assessing Kellerman's performance). (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).) Actual: Flexible Budget: 25,000 Units 25,000 Units Variance Favorable Total None Unfavorable Which of the following two reports is preferred? O A performance report based on flexible budgeting. O A performance report based on static budgeting