QUESTION 34 Forrest Glump Company is excited about its newly implemented budgeting program. In the month of May, 2017, the Budget Officer presented the following budget report FORREST GLUMP COMPANY BUDGET REPORT FOR THE MONTH ENDED MAY 31, 2017 Difference Favorable F Production Costs Budget Actual Unfavorable U Variable Costs: Direct Materials $ 57,600 $ 56,400 $ 1.200 F Direct labor 64,800 61.440 3.360 F Indirect materials 28.800 29.040 240 U Indirect labor 21,600 21,000 600F Utilities 18,000 17 880 120 F Maintenance 7 200 7.440 240 V Total Variable 198,000 193 200 4.800 F Fixed costs Rent 14.400 14,400 Depreciation 7,200 7200 Supervision 20.400 20 400 Total fored 42.000 Total costs S 240.000 loob The May budget reported above is based on expected manufacturing of 72 000 units per month (864,000 annually). While the budget officer is fairly happy about the report, the CEO, Forrest Gump. is not so amused His expectation was that the company would sell close to 70.000 units You are a summer intern and have been asked to comment on this matter REQUIRED 1. Do you agree that the budget office should be happy about the May 17 report? Explain THOROUGHLY and CLEARLY You might want to prepare another report to support your agreement or disagreement with the budget officer's happiness 3. In June, 76.800 units were produced. The CEO, Forrest Gump, was quite pleased (1) the June variable costs were 10% higher than the May actual variable costs and (2) the fixed costs were the same as in May, should the CEO be pleased? Explain THOROUGHLY CLEARLY Be sure to show ALL supportive reports