Please show work so that I can complete similar type problems. Thanks!

Suppose a chain of Fried Chicken franchises in Shanghai had budgeted sales for 2012 of RMB 7.2 million (where RMB stands for the Chinese unit of currency, officially the renminbi, also called the yuan). Cost of goods sold and other variable costs were expected to be 60% of sales. Budgeted annual fixed costs were RMB 1.4 million. A strong Chinese economy caused actual 2012 sales to rise to RMB 8.9 million and actual profits to increase to RMB 1,800,000. Fixed costs in 2012 were as budgeted. The franchisee was pleased with the increase in profit.

1.

Compute the sales-activity variance and the flexible-budget variance for income for 2012. What can the franchisee learn from these variances?

2.

Suppose that in 2013 the Chinese economy weakened, and the franchise's sales fell back to the RMB 7.2 million level. Given what happened in 2012, what do you expect to happen to profits in 2013 ? Requirement 1. Compute the sales-activity variance and the flexible-budget variance for income for 2012. What can the franchisee learn from these variances? Begin by completing the flexible budget. (Enter all amounts as positive numbers. Enter amounts in millions of Chinese RMB's. Round all answers to two decimal places. For variances with a zero balance, make sure to enter "0" in the appropriate field. If the variance is zero, do not select a label.)

	Actual Results at Activity Level	Flexible Budget Variances	Flexible Budget for Actual Sales Activity	Sales Activity Variances	Static Budget
Sales
Variable Costs
Contribution Margin
Fixed costs
Operating Income

The sales activity variance is RMB ________million and is favorable/not favorable. The flexible budget variance is RMB 30 million unfavorable. This illustrates how cost overruns can be hidden by sales volume increases.

The static budget for sales of RMB ____million forecasts operating income of RMB _____. However, this amount would be reduced by any variable cost overruns, similar to in 2012.