Barrington Ltd has prepared the following fixed budget performance report:

	BARRINGTON LTD Fixed Budget Performance Report for the year ended 30 June 2017
		Budget				Actual				Variance
	Units produced		50 000				55 000				5 000	F
	Variable costs: Direct materials Direct labour Indirect materials Indirect labour Electricity and gas	$	700 000 300 000 60 000 40 000 75 000			$	824 000 390 000 61 600 50 400      61 600			$	124 000 90 000 1 600 10 400 13 400	U  U  U  U  F
	Total variable costs		1 175 000				1 387 600				212 600	U
	Fixed costs: Supervisor’s salary Rent Insurance Maintenance Depreciation Total fixed costs		88 000 120 000 23 000 15 000      18 000    264 000				84 000 120 000 24 000 18 000      18 000    264 000				4 000 0 1 000 3 000           0 0	F  U  U
	Total manufacturing costs	$	1 439 000			$	1 651 600			$	212 600	U
	U indicates an unfavourable variance. F indicates a favourable variance.

The variable cost rates per unit for Barrington Ltd are as follows:

Cost item	Variable cost rate per unit
Direct materials Direct labour Indirect materials Indirect labour Electricity and gas	$	14.00 6.00 1.20 0.80   1.50
	$	23.5

Required

A. Prepare a flexible budget performance report for the actual level of activity.

B. Comment on the significant variances in the flexible budget performance report and explain why this is a better method of measuring variances than a fixed budget performance report like the one above.

C. If the units produced was less than budget what disadvantages might a flexible budget performance report have?