Question 2 (25 marks) - Budgeting Activities Mens Clothing Company produces men's ties since 1995. In order to reasonably plan and closely control their manufacturing costs, they use the budgeting system. The following budgeted and actual amounts are released to top management for 2020 and they asked you, a cost accountant, to prepare a performance budget report so that they can analyze all type of variances including both favourable and unfavourable. Badget3000 Units Actual Amounts at 3.No Limits Direct materials Direct labour Equipement depecciation Indirect labow Indirect materials Rent and insurance Cosi 575.000 16.000 5,000 3.000 2.000 18.000 SMO 48.00 5.000 4.000 3.000 19.000 Instructions: 1. Prepare a static budget report for Mens Clothing Company for the year. (5 marks) Account 1.800 units COM Budgeted State Budget costs at 3,000 urine Jenis Direct materials $75.000 Direct labeur 36.000 Equipment depreciation 5.000 lect labore 3.000 Indirect materials 2006 Rent and insurance 18.000 SKLOOD 2X 5.00 4.100 19.000 b. Prepare a flexible budget report for MensClothing Company for the year. (10 marks) Hadgeted costs Variances Flexible Rudget at Variances Actual costat a 3.000 actual activity level 1.800 units $75.000 $90,000 36.000 48.000 5.000 5.000 3,000 4.000 2.000 18.000 c. Are there any problems identified in part (b) that top management and a production manager should be aware of? Briefly explain (5 marks) d. What are disadvantages of the static budget? Briefly explain