The Continuum Company believes that their variances have causes beyond the mere components of each variance. Therefore, after calculating the variances for the current period, and gathering a few additional facts, the managers sat down and tried to draw the linkages between the variances using a cause-and-effect diagram. Here is the data the managers collected: Costs and Quantities: - The Purchasing Agents are evaluated on the total material variance (Actual Cost of Materials Used - (Standard Price X Standard Quantity Allowed)) - Sales volume increased this period compared to last period. - Production Volume increased to meet the increased demand. - Overtime decreased this period. - The Direct labor rate variance was $5,000 Unfavorable LAST period. - Machines need lubrication based on the machine hours run. - Lubricants are an indirect material included in Variable Overhead. Required: 1. Determine the Actual, Flexible and Static Budgets. Include the Flexible Budget Variances and the Sales Volume Variances. 2. Determine as many additional variances as possible, given the data presented. 3. Create a Current Reality Tree cause and effect diagram and explain the relationships between as many of the variances as you can