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 Budget Actual Sales volume (units) 1,300 1,180 Sales revenue 383,500 348,100 Direct material 104,000 91,450 Direct labour 71,500 70,800 Production overheads 55,750 55,100 Selling & installation costs 109,750 95,280 Administration costs 26,500 26,800 Profit 16,000 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 Sales (units) Total cost () October 1,250 106,000 November 1,550 128,500 December 1,400 118,500 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)