The fixed budget and actual results for J Ltd for the latest period are as follows.

Production and sales Budget 4,000 units ($) Actual 4,640 units ($)

Direct material 18,000 21,840

Direct labour 21,000 25,320

Variable overhead 12,000 13,200

Fixed overhead 16,800 18,000

Total cost 67,800 78,360

Sales revenue 96,000 112,080

Profit 28,200 33,720

Required

(1) Prepare a flexible budget control report for the period, identifying the cost and revenue variances. (10 marks)

(2) Comment on this statement (5 marks):

A budget is a forecast of an organisations activities for the forthcoming period.