Part2-3:

Part 2 Questions (20 points) Answer BOTH of the following Two questions. 1. What is a flexible budget and how does it differ from a static planning budget? 2. If the materials price variance is favorable but the material quantity variance is unfavorable, what might this indicate? Part 3 Production Budget (30 points) Down Under Products, Ltd. has budgeted sales of its popular boomerang for the next three months as follows: Unit Sales May 75,000 June 90,000 July 80,000 The company is now in the process of preparing a production budget for May and June. Past experience has shown that end-of-month inventory levels must equal 10% of the following month's unit sales. The inventory at the end of April can be calculated. Required: In good form, prepare a production budget for May and June along with a total for the two months. Show work to receive full credit. Down Under Products, Ltd. Production Budget for the months of May June Total Relating to Month of