Using Flexible Budgets

The following summary data are from a performance report for Sterling Company for May, during which $9,600$ units were produced. The budget reflects the company's normal capacity of $10,000$ units.

$\backslash$table$[[,\backslash$table$[[$Actual Cost$],[9\mathrm{.}600]],\backslash$table$[[$Budget$],[10,000]],,$UR$],[,,,$$$,$Type$],[$ect $n,$$$136,800,$$$140,000,$$$(3,200),$Favorable$],[$eat$,77,200,280,000,(2,800),$Favor$],[$ariabl$,98,400,96,000,2,400,$Unfal$],[$ked$,72,400,72,000,400,$Unfavorable$],[-,$$$584,80,$$$588,000,$$$(3,200),]]$

a$.$ Prepare a new performance report using flexible budgeting. Round all amounts to the nearest dollar.

b$.$ Which of the two performance reports should Sterling Company management use to measure the company's operating efficiency in May?