Struss Corporation manufactures tables for schools. The 2022 operating budget is based on sales of 80,000 units at $400 per table. Budgeted variable costs are $250 per unit, while fixed costs total $4,000,000.

For 2022, actual sales were 75,000 units at $420 each. Actual variable costs were $260 per unit and fixed costs totaled $3,900,000.

Required:

a) Prepare a report showing actual results, a static budget and a flexible budget.

b) Explain the significance of a flexible budget versus a static budget.