Norland-Norge AS produces corporate notebooks. Each notebook is designed for an individual customer. The company’s operating budget for September 2018 included these data: 

Number of notebooks .......................................................................... 15,000 

Selling price per book ........................................................................... NKR 20 

Variable costs per book  ...................................................................... NKR 8 

Total fixed costs for the month .......................................................... NKR 145,000 

The actual results for September 2018 were: 

Number of notebooks produced and sold ...................................... 12,000 

Average selling price per book ..........................................................   NKR 21 

Variable costs per book ......................................................................   NKR 7 

Total fixed costs for the month ........................................................   NKR 150,000 

The managing director of the company observed that the operating profit for September was much less than anticipated, despite a higher-than-budgeted selling price and a lower-than budgeted variable cost per unit. You have been asked to provide explanations for the disappointing September results. 

Norland-Norge develops its flexible budget on the basis of budgeted revenue per output unit and variable costs per output without a detailed analysis of budgeted inputs. 

Required

1. Prepare a Level 1 analysis of the September performance. 

2. Prepare a Level 2 analysis of the September performance. 

3. Why might Norland-Norge find the Level 2 analysis more informative than the Level 1 analysis? Explain your answer.