The red figure are the answers for the question above but I do not understand how you calculate the red figure. For example 1062500 or 255000. Can you please show the working of how you get the answer.

2. Flexible budgeting Taonga Whero Lid hired a new marketing manager early last year. After an informal consumer survey, the marketing manager decided to lower the firm's selling price by 10 per cent and increase television advertising. The operating results at year end were disappointing. The marketing manager prepared the following analysis. He assumed that direct materials and direct labour were variable costs and that advertising was a fixed cost. Budget Actual Variance Units 150,000 170,000 Sales $937,500 $956,250 $ 18,750 F Direct materials $225,000 $249,900 $24,900 U Direct labour $262,500 $289,000 $26,500 U Variable overhead $1 12,500 $127,500 $15,000 U Fixed overhead $75,000 $75,200 $200 U Advertising $20,000 $40,000 $20,000 U Operating income $242,500 $174,650 $67,850 U "As you can see", the marketing manager reported, "the major problem is due to inefficiencies in production. My plan would have worked if production had managed its costs better." Required: (a Prepare a flexible budget report. (21 marks) (b) What is the real source of the disappointing results? Explain. (3 marks) TOTAL: 24 MARKS