Question 26 (6 points) Saved The following static and flexible budget report was prepared for the sales manager of Dreamy Sleep Ltd for the fourth quarter of 2020: Static Budget (10,000 units) Budget Actual $ 1,500,000 $ 1,800,000 $ Variance 300,000 Sales Variable costs: Commissions (15% of sales) Advertising (20% of sales) Travel (10% of sales) 265,000 40,000 U U 225,000 300,000 150,000 675,000 350,000 175,000 790,000 50,000 25,000 U 115,000 U Fixed costs: Sales salaries Administrative salaries 15,000 U 120,000 135,000 75,000 75,000 195,000 210,000 870,000 $1,000,000 $ U 15,000 130,000 Total costs S Flexible Budget (Actual sales 12,000 units) Budget Actual Variance Sales $ 1,800,000 $ 1,800,000 S Variable costs: Commissions (15% of sales) 270.000 265,000 5,000 Advertising (20% of sales) 360,000 350,000 10,000 F Travel (10% of sales) 180,000 175,000 5,000 F 810,000 790,000 20,000 Fixed costs: Sales salaries 120,000 135,000 15,000 U Administrative salaries 75,000 75,000 195,000 210,000 15,000 Total costs $ 1,005,000 $1,000,000 S 5,000 Required: Assuming the sales manager has control over sales and selling costs, and in your own words: a) Explain the difference between static and flexible budgets, and why flexible budgets are useful. (3 marks) b) Comment on the manager's performance. (3 marks) Paragraph B I Uv A oi + ... Answer (part a)