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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. Static Budget Actual Variance Favorable or Amount Results Amount Unfavorable Sales in Units 4, 160 5,010 Sales 520,000 $ 601,200 Less: Variable Costs: Cost of Goods Sold 223,000 215,000 Sales Commissions 62,400 90, 180 Total Variable Costs 285,400 305, 180 Contribution Margin 234,600 296,020 Less: Fixed Costs: Total Fixed Costs 185,000 195,000 Net Operating Income 49,600 101,020What is the weakness of using a static budget report to evaluate performance? (2 marks)Required: Part B (6 marks) - The owners can see that the company sold a different amount of units than budgeted. They have asked you to create a flexible budget report. Favorable [F) Flexible or Budget Actual Varian ce Unfavorable Amount Results Amount [U) Sales in Units 5,010 Sales 601, 200 Less: Variable Costs: Cost of Goods Sold 215,000 Sales Commissions 90, 180 Total Variable Costs 305, 180 Contribution Margin 296,020 Less: Fixed Costs 195,000 Net Operating Income 101,020Management 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 budget report? (3 marks]