Problem 2 (Textbook Reference: P7-2)-Prepare a planned operating budget and a flexible operating budget The computation of operating income for Frisco Company for 201 3 follows: FRISCO COMPANY Income State ment For the Year 2013 1,800,000 Sales Cost ofgoods sold: Direct materias Direct bbor Variable overhead Fixed overhead 360,000 240,000 120,000 240,000 960,000 840,000 Total cost of goods sold Gross margin Operating expenses: Varuble selling Fixed selling Variable administrative Fixed administrative 132,000 168,000 156,000 192,000 648,000 192,000 Total operating expenses Net operating income An operating budget is prepared for 2014 with sales forecasted at a 25% increase in volume. Direct materials, direct labor and all costs labeled as variable are completely variable. Fixed costs are expected to continue except for a $24,000 increase in fixed administrative costs. Actual operating data for 2014 are: Sales Direct materias Direct hbor Variable manufacturing overhead Fixed manufacturing overhead Variable seling expenses Fixed selling expenses Variable administrative expenses Fixed administrative expenses 2,160,000 444,000 288,000 148,800 246,000 186,000 157,200 198,000 218,200 Required: Prepare a budget report comparing the 2014 planned operating budget with actual 2014 data. Prepare a budget report that would be useful in appraising the performance of the various persons charged with responsibility to provide satisfactory income. (Hint: Prepare budget data on a flexible basis and use the percentage by which sales were actually experienced.) a. b. Templates for parts (a) and (b) have been provided on the next pages*