Question 1 Otuo has recently opened a fast-food restaurant in a small town. Fast-food restaurants are characterised by their quick food service. The fast-food restaurant market in the town is dominated by a small number of long established restaurants. Otuo is seeking to grow its business and attract the town's residents with its burger meals. The performance report for the first month of business is to be presented at the restaurant's monthly management meeting. A draft performance report for the first month of business is reproduced below: Budget Actual Variance Sales (number of meals) 6,000 5,400 (600) GH GH GHe Revenue 180,000 167,400 12,600 A Direct Material 48,000 49,140 1,140 A Direct Labour 33,000 27,000 6,000 F Variable Prod. O/H 21,000 18,900 2,100 F Fixed costs 36,000 40,000 4,000 A Profit 42,000 32,360 2.640 A Required: i) Explain the term flexible budget. ii) Using a flexible budgeting approach, redraft the operating statement so as to provide a more realistic indication of the variances. (Note: You are not required to explain the causes of the variances) iii) In TWO (2) ways, explain why the original operating statement was of little use to management. iv) Explain three (3) non-financial measures that Otuo could use to monitor the performance of the new fast-food restaurant.