The financial controller of the local town council set a budget for street cleaning in one estate as shown in the first column below. In the month of April the cleaning supervisor cut back on 20 miles of cleaning to save costs. The actual costs for April are shown in the second column below.

Required (1) Prepare a statement showing a flexible budget and variances.
(2) Write a short comment to the financial controller on the effectiveness of the cleaning supervisor’s attempt to reduce costs.

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Miles of streets cleaned per week Cleaning materials (variable) Fuel for vehicle (variable) Direct labour (fixed) Fixed overhead Total production costs Original budget 400 1,600 6,000 1,500 1,000 10,100 Actual for April 380 1,550 5,800 1,550 1,000 10,100