The computation of operating income for Frisco Company for 2013 follows:
Sales			$1,800,000
Cost of Goods manufactured and sold:
Direct mateirals		$360,000
Direct Labor		240,000
Variable manufacturing Overhead		120,000
Fixed manufacturing overhead		240,000	960,000
Gross Margin			$840,000
Selling Expenses:
Variable		132,000
Fixed		168,000	300,000
			$540,000
Administrative Exepenses:
Variable		$156,000
Fixed		192,000	348,000
Net Operating income			$192,000
An operating budget is prepared for 2014 with sales forecasted at a 25% increase in volume.
Direct materials, direct labor and all costs labeled as variable are completely variable.
Fixed costs are expected to continue except for a $24,000 increase in fixed administrative costs. Actual operating data for 2014 are:
Sales		$2,160,000
Direct Material		444,000
Direct Labor		288,000
Variable manufacturing overhead		148,800
Fixed manufacturing overhead		246,000
Variable sellling exoenses		186,000
Fixed selling expenses		157,200
Variable administrative expenses		198,000
Fixed Administrative expenses.		218,200
a) Prepare a budget reprot comparing the 2014 planned operating budget with actual 2014 data
b) Prepare a budget report that would be useful in appraising the performance of the various persons charged with responsibility to provide satisfactory income.
Hint: Prepare budget data on a flexible basis and use the percentage by which sales wew actually experiences.
c) Comment on the differences revealed by the two reports.