For this question, you need to prepare a flexible budget and offer a critical analysis of the performance of different items.

The following are the budgeted and actual income statements for Baxter Ltd for the month of July:

Output (production and sales)	Budget 1000 units	Actual 1050 units
Sales Revenue	100,000	104,300
Raw materials	(40 000) (40 000 meters)	(41,200) (40,500 meters)
Labour	(20 000) (2,500 hours)	(21,300) (2,600 hours)
Fixed overheads	(20 000)	19,400
Operating profit	20 000	22,400

All of this is in pounds.