Question: Develop a static and flexible budget for the year using the quarterly budget information provided in Exhibit 1. For the static budget, determine the

Develop a static and flexible budget for the year using the quarterly budget information provided in Exhibit 1. For the static budget, determine the total number of units budgeted for the year and then calculate the fixed and variable costs for that amount of production. (Hint: Using the quarterly information, calculate a cost per unit for variable costs and then calculate the total cost for the total budgeted units). Develop the retrospective flexible budget based on the actual quantity produced during the year. a. Based on the actual results, calculate the static and flexible budget variances. b. Why are the variances for certain categories of costs quite different between the flexible and static budget? c. Are the static budget variances or the flexible budget variances more useful to evaluate Holly's performance? Explain your viewpoint.

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