The CEO is convinced of the Director of Sales' ability to achieve a profit of $40,000 a month and reports those costs on the company's static budget. However, actual sales for the first month were 12,900 units. The actual revenues and expenses for the month were: VARIABLE COSTS (per unit) Sales: Direct Materials: Direct Labor: $237,457 $15,200 $58,050 Indirect Materials: Indirect Labor: $1,305 $2,200 Utilities for Factory: $8,900 Supplies for Factory: $1,925 Variable Administrative Salaries $9,702 Variable Sales Commissions: $14,760 FIXED COSTS (per month) Factory Supervisor Salaries: $43,000 Factory Depreciation: $15,500 Property Taxes (Factory): $4,500 Insurance (Factory): $3,500 Maintenance (Factory): $1,860 Fixed Sales Salaries $10,000 Depreciation, Sales Equip. $12,250 Advertising $5,720 Requirement 4 (40 points) 1. Prepare a report showing the revenue and spending and activity variances for each cost, including total and net income amounts. (Remember, you will need to prepare a flexible budget for the actual level of activity in order to complete this report.) 2. Based on your report, answer the following: a. Look at the Revenue Variance in conjunction with the Selling Expense variances. What is a possible explanation for these variances? b. Are the Activity Variances mostly favorable or unfavorable? Is this a good thing? What do activity variances tell us about the company's performance? c. What do you notice about the FIXED activity variances? Why is this the case? d. What do the Direct and Indirect Materials spending