Question 3 (7 marks) ECCO Equipment produces exercise equipment. The following schedule reveals anticipated monthly production of bicycles for the first three months of the year: January 10,000 February 14,500 March 12,000 ECCO budgets for three direct labor hours per bicycle, at an average cost of $18 per hour. Variable manufacturing overhead is applied at the rate of $10 per direct labor hour. Fixed overhead is expected to be $110,000 per month, which includes $15,000 per month of noncash expenses related to depreciation. Required: a) Prepare a direct labor budget for the first three months of the year. (2 marks) b) Prepare a manufacturing overhead budget, showing the monthly cash outflow for the first three months of the year. (3 marks) c) Would you refer to the budgets in (a) and (b) static or flexible budgets? Explain. (2 marks) [Word limit: 150] SHOW YOUR WORKING