The Rescuers, Ltd. operates a fleet of trucks which locate and/or respond to calls from disabled cars or accidents. Repairs are down at the location of the problem (9-% of which are on the QEW). If damage is too severe, or the problem is such that it cannot be taken care of immediately, the drivers tow the car to a repair facility chosen by the vehicle owner.

The drivers of the trucks are considered independent contractors and are paid a set amount for each service incident that us completed on site (and nothing is they tow the vehicle, although they often receive tips from the vehicle owners and some repair ship offer "kickbacks" to tow trucks that bring in business). The firm owns the trucks, and pays for all repairs and maintenance, including gas. The firm budgets carefully for each month. Customers are charged a flat fee if towing is necessary, and various fees is raids are conducted on site. Gas and repairs are budgeted on the basis of kilometres driven. The static budget variances for March, 2018 were as follows:

	Budget	Actual	Variance
Service calls	18,000	18,240	240F
Completed onsite	13,500	12,979	521U
Towed	4,500	12,979	761U
Kilometers driven	234,000	269,800	35,800U
Revenue (from repairs)	$11,475,000	$10,386,200	$1,088,800U
Revenue (from towing)	675,000	789,150	91,800F
Variable costs:
Gas	51,480	67,400	15,920
Parts	1,147,500	920,600	226,900F
Payments to drivers	2,430,000	2,336,220	66,960F
Maintenance for trucks	538,200	493,400	44,800F
Fixed costs
Salaires	70,000	75,000	5,000U
Amortization on trucks	950,000	950,000	-

1. Prepare a flexible budget analysis for The Rescuers for the month of February. Be sure to include the activities levels

2. Examine the solution to the flexible budget. Do you find any indication of a problem that the firm’s management should address? Be specific about what may be wrong. Note: there could easily be more than one problem.