PART (19 points) Red Sea Company estimates that 300,000 direct labor hours will be worked during the coming year, 2020, in the Assembly Department. On this basis, the budgeted manufacturing overhead cost data are computed for the year: Fixed Overhead Costs Variable Overhead Costs Supervision $ 96,000 Indirect labor S126,000 Depreciation 72,000 Indirect materials 90,000 Insurance 30,000 Repairs 69,000 Rent 24,000 Utilities 72,000 Property taxes 18.000 Lubricants 18.000 $240,000 $ 375.000 It is estimated that direct labor hours worked each month will range from 27,000 to 36,000 hours. During October, 28,000 direct labor hours were worked and the following overhead costs were incurred: Fixed overhead costs: supervision $8,000; depreciation $6,000; insurance $2,460; rent $2,000; and property taxes $1,500. Variable overhead costs: indirect labor $13,432; Indirect materials $6,680; repairs $5,100 utilities $7.940; and lubricants $1,820 Required (a) Prepare a flexible budget report for the month of October indicating the "Favorable" and "unfavorable" cost variances". (12 points) (b) Comment on management's efficiency in controlling manufacturing overhead costs in October (3 points) (c) Saad Al-Zahrani is studying for an accounting examination. Explain to Sand under what circumstances may a static budget be an appropriate basis for evaluating a manager's performance in controlling costs. (4 points)