Please check this let know if correct and need answer if possible and also for static budgets

Question 6 - Variance Analysis (15 marks) Assume that owners decided to go ahead with the Canmore expansion (first introduced in question 4). The junior accountant has prepared the following report to compare the static budget (from question 4) to the actual results. The owners have asked you to complete a variance analysis. W Required: Part A (4 marks)- Create a Static Budget Report Variance Analysis, indicating whether variances are favorable (F) or unfavorable (U). All variance amounts should be shown as positive numbers. 5 Static Budget Actual Variance Favorable or 6 Amount Results Amount Unfavorable 7 Sales in Units 4,008 5,320 1,312 Favorable 8 Sales S 501,000 $ 638,400 137,400 Favorable 9 Less: Variable Costs: 10 Cost of Goods Sold 217,000 218,000 1,000 Favorable 11 Sales Commissions 75,150 70,224 4,926 Favorable 12 Total Variable Costs 292,150 288,224 3,926 Favorable 13 Contribution Margin 208,850 333,120 124,270 Favorable 14 Less: Fixed Costs: 15 Total Fixed Costs 191,000 192,000 1,000 Favorable 16 Net Operating Income 17,850 144,120 126,270 Favorable 17 What is the weakness of using a static budget report to evaluate performance? (2 marks) 18 19 20 Required: Part B (6 marks) - The owners can see that the company sold a different amount of units than 21 budgeted. They have asked you to create a flexible budget report. 22 Flexible Budget Actual Variance Favorable (F) or 23 Amount Results Amount Unfavorable (U) 24 Sales in Units 5,320 5,320 V/A 25 Sales 665,000 638,400 26,600 Favorable 26 Less: Variable Costs: 27 Cost of Goods Sold 288,034 218,000 70,034 Favorable 28 Sales Commissions 99,750 70,224 29,526 Favorable 29 Total Variable Costs 387,784 288,224 99,560 Favorable 30 Contribution Margin 277,216 333,120 55,904 Unfavorable 31 Less: Fixed Costs 191,000 192,000 1,000 Unfavorable 32 Net Operating Income 86,216 141,120 54,904 Unfavorable 33 Management was pleased on the results based on the static budget report. Should they be pleased? What does the flexible budget tell you? What are your recommendations to management based on the flexible 34 budget report? (3 marks) 35