The fixed budget performance report for the year ended 30 June 2025 for Motueka Mint is as follows.

Required

(a) Convert the fixed budget performance report prepared by Motueka Mint to a flexible budget performance report.

(b) Why does a report based on a flexible budget provide a better means of evaluating performance as opposed to a fixed budget?

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Units of production: Factory overhead: Variable costs: Budget 84 000 Actual Variance 94000 10000 F Indirect labour $193 200 Factory supplies 134 400 Repairs and maintenance 67 200 Total variable overhead 394 800 $216200 178600 112800 507 600 $ 23000 U 44 200 U 45 600 U 112 800 U Fixed costs: Factory insurance Utilities Depreciation Management salaries Total fixed overhead Total factory overhead U indicates an unfavourable variance. F indicates a favourable variance. 131100 $525900 12000 13500 18600 14500 24 000 13800 86 000 92 000 143 300 $650900 1500 U 5400 U 700 F 6000 U 12200 U $125000 U