Q7-Flexible budgets, variance analysis. You have been hired as a consultant by Mary Flanagan, the president of a small manufacturing company that makes automobile parts. Flanagan is an excellent engineer, but she has been frustrated by working with inadequate cost data. You helped install flexible budgeting and standard costs for Flanagan's company. She has now asked you to consider the following data for May and recommend how variances might be computed and presented in performance reports. Static budget in output units Actual output units produced and sold Budgeted selling price per output unit Budgeted variable costs per output unit Budgeted total fixed costs per month Actual revenue Actual variable costs Favorable variance in fixed costs 20,000 23,000 40 $ 25 $ 200,000 $ 874,000 $ 630,000 $ 5,000 $ Flanagan is disappointed in the May data. Although output units sold exceeded expectations, operating income did not. Assume that there was no beginning or ending inventory. REQUIRED: 1. You decide to present Flanagan with alternative ways to analyze variances so that she can decide what level of detail she prefers. The reporting system can then be designed accordingly. Prepare an analysis similar to levels 1 and 2 ? 1- What are some likely causes for the variances you report in requirement 1?