Required

2. Flexible Budgeting, worth 20 points Cutter Co. provides the following initial budget data for the year; Sales (21000 units) 672.000 Cost of Sales: Direct materials 210,000 Direct labor 168,000 Variable overhead 63.000 Fixed overhead 125.000 Total Cost of Sales $66.000 Gross Profit 106,000 Operating Expenses: Fixed operating exp. 15,000 Variable operating exp. 42,000 $7,000 Income from operations 49,000 Required: First, put the financial statement above in Cost Volume Profit Format and show that statement below. Then, prepare the flexible budget that should be used for a performance report assuming that the department will produce 22,000 units. Second, let's analyze just fixed overhead. Assume that actual fixed overhead is $127,541 when 22000 units are produced. What is the total fixed overhead variance? Is it a favorable or unfavorable variance