Trumpet Ltd is considering producing a new product to market overseas. It expects that it will be able to sell the product for $400 per unit. The costs involved with the product are variable costs of $200 per unit and fixed costs of $1,500,000.

You have been provided with the following information on the expenses of Trumpet Ltd for the month of May 2020:

	ACTUAL 100,000 units	BUDGET 80,000 units
Materials	211,200	160,000
Direct labour	158,000	128,000
Maintenance	20,800	16,000
Glue, screws, nails	10,000	8,000
Supplies	38,000	32,000
Electricity	31,000	24,000
Rent	24,000	24,000
Salaries	9,000	9,000
TOTAL	$502,000	$401,000

You are required to:

(i) Prepare the performance report for the month of May 2020 using the flexible budget approach

(ii) Where there is an unfavourable variance give possible reasons and corrective action