Perjaya Plastics Ltd has prepared the following fixed budget performance report for the production department’s financial results during the year ended 30 June 2017:

	PERJAYA PLASTICS LTD Fixed Budget Performance Report for the year ended 30 June 2017
		Budget					Actual						Variance
	Units of production:		144 000						126 000						18 000	U
	Manufacturing costs: Direct materials Direct labour Factory overhead: Variable costs: Indirect labour Supplies Repairs	$	648 000 504 000 36 000 57 600 43 200					$	577 200 430 560 32 760 54 600   28 080					$	70 800 73 440 3 240 3 000    15 120	F F F F F
	Total variable overhead		136 800						115 440						21 360	F
	Fixed costs: Depreciation Insurance Rent Salaries		127 200 2 400 12 000    16 800						127 440 2 920 12 000    17 280						240 520 —       480	U U U
	Total fixed overhead		158 400						159 640						1 240	U
	Total factory overhead		295 200						275 080						20 120	F
	Total manufacturing costs	$	1 447 200					$	1 282 840					$	164 360	F

Required

A.    Should the production department manager be rewarded for the significantly large favourable variance reported for the year? Explain.

B.    Prepare a flexible budget performance report for the company’s results. Comment on the manager’s performance.