Video Tech Ltd manufactures video game machines. Market saturation and technological innovations have caused pricing pressures that have resulted in declining profits. To stem the slide in profits until new products can be introduced, top management has started to focus on achieving cost savings in manufacturing and increases in sales volume. Sales can be increased only if production volume increases. Therefore, an incentive program has been developed to reward those production managers who contribute to an increase in the number of units produced and achieve cost reductions. In addition, a just-in-time purchasing program has been implemented, and raw materials are purchased on an as-needed basis. The production managers have responded to the pressure to improve manufacturing performance and this has resulted in an increase in the number of completed units over normal production levels. The video game machines are put t( I can see the ans of similar question but there is missing colour for static budget

(4) Evaluate Robert Smith's analysis of the unfavourable conuibution margin results in terms of its validity and completeness. and its effect on the behaviour of the production groups. (5) Prepare a revised contribution margin report showing proper variable cost variances based on a exible budget instead of the static budget used by Robert Smith. Use the following format: Static Flexible ' Budget Budget Actual Variance Units Revenue Variable costs: Direct material Housing units Printed circuit boards Reading Heads Total direct material Direct labour Assembly Printed circuit boards Reading Heads Total direct labour Variable overhead Total variable costs Contribution margin