SunPower Ltd manufactures, sells, and installs solar panels that are sold to domestic customers. The industry is highly competitive, and the management team reviews the company's performance on a monthly basis. The trainee Management Accountant has therefore produced a comparison of budgeted and actual performance for April and this is shown below: Comparison of budgeted and actual performance for April Sales volume (units) Sales revenue Direct material Direct labour Production overheads Selling & installation costs Administration costs Profit Budget 1,300 383,500 71,500 55,750 109,750 104,000 91,450 26,500 Actual 16,000 1,180 348,100 70,800 55,100 95,280 26,800 8,670 Production overheads and administration costs are believed to be fixed, whereas selling and installation costs are semi-variable. The selling and installation cost budget was set by taking appropriate information from the results for the last three months of 2019, which are shown below: Selling and installation costs October November December Sales (units) 1,250 1,550 1,400 Total cost () 106,000 128,500 118,500 The Finance Director is concerned that the selling and installation costs budget may have been padded, but the Installation Manager complained that the budget includes costs that she does not control. Required a) Identify FOUR reasons why SunPower should produce budgets. The word count is capped at 100 words. (4 marks) b) Produce a performance statement for April using flexible budgeting principles. All calculations must be clearly shown (8 marks) c) Explain what "padding the budget" means, why SunPower's managers may be motivated to pad the budget. The word count is capped at 200 words. (8 marks)