Using Flexible Budgets The following summary data are from a performance report for Hyland Company for June, during which 9,600 units were produced. The budget reflects the companys normal capacity of 10,000 units.

Actual Costs (9,600 Units) Budget (10,000 Units) Variances Direct material ... Direct labor Variable overhead $102,600 207,900 73,800 54.300 5 $438,600 $105,000 210,000 72,000 54,000 $441,000 [$2,400 F] [2,100 F] 1,800 U 300 U [$2,400 F] Fixed overhead............................... .................. Total ...... a. What is the general implication of the performance report? Why might Hyland question the significance of the report? b. Revise the performance report using flexible budgeting and comment on the general implica- tion of the revised report