Using Flexible Budgets

The following summary data are from a performance report for Hyland Company for May, during which $7,200$ units were produced. The budget reflects the company's normal capacity of $7,500$ units.

$\backslash$table$[[,\backslash$table$[[$Actual Cost$],[7,200],[$units$]],\backslash$table$[[$Budget$],[7,500],[$units$]],$Variances$],[,$$$,$Type$],[$Direct material,$$128,250,$$$131,250,$$$(3,000),$Favorable$],[$Direct labor,$259,875,262,500,(2,625),$Favorable$],[$Variable overhead,$92,250,90,000,2,250,$Unfavorable$],[$Fixed overhead,$67,875,67,500,375,$Unfavorable$],[$Total$,$$$548,250,$$$551,250,$$$(3,000),$Favorable$]]$

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

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

The performance report that compares actual costs to flexible budget costs.