Problem: Appliance company produces fans. The director prepared a master budget based on sales level of 19,500 fans for the month of March. Below is the budgeted income statement for the period: Budgeted Income Statement Revenue $3,120,000 Variable expenses Direct materials $877,500 Direct labor 390,000 Variable overhead 585,000 Total variable expenses 1,852,500 Contribution margin 1,267,500 Fixed overhead 325,000 Fixed selling and administrative expenses 650,000 Total fixed expenses 975,000 Operating income $ 292,500 During March, Appliance sold 23,400 fans and had the following actual results: Actual Income Statement Revenue $3,731,000 Variable expenses Direct materials $1,037,400 Direct labor 487,500 Variable overhead 715,000 Total variable expenses 2,239,900 Contribution margin 1,491,100 Fixed overhead 351,000 Fixed selling and administrative expenses 650,000 Total fixed expenses 1,001,000 Operating income $ 490,100 Required: a. Prepare a flexible budget for March. b. Calculate Appliances static budget variance for March. c. Will the static budget variance that you calculated in part (b) be useful to management? Why or why not? d. Based on the available information, prepare a performance report for management including flexible budget variance and sales volume variance. e. Comment on the results of your report. f. Suppose that Appliance company has decided to outsource one of its activities because salaries and cost of employee benefits increased. As director of the team responsible for determining the best activity to be outsourced, what must you say to the CEO when meeting with him, explaining why your team chose to outsource the payroll function. Explain to the CEO the impacts of your teams decision on the business (use examples and you can assume any missing information you need to explain).