Part A: Create a flexible budget for each division (include all income statement items). Part B: Calculate the following variances for each division and state whether each is favorable or unfavorable: - Overall static budget variance - Overall flexible budget variance - Sales activity variance (one for resale items and one for manufactured items) - Sales price variance (one for resale items and one for manufactured items) - Direct materials price variance - Direct materials efficiency variance - Direct labor rate variance - Direct labor efficiency variance - Variable overhead spending variance - Variable overhead efficiency variance - Fixed overhead spending variance - Direct cost variance for the resale items (this variance is based on the expected versus the actual cost per resale item) - Variable selling cost variance (this variance is based on the expected versus the actual variable selling cost per item). Note: The actual and budgeted amounts per unit are expected to differ for items sold across the two divisions. Part C: Select 4 variances for each division that you've calculated in Part B and provide at least two possible reasons for these 8 variances. Note a possible reason for the variance is not simply restating how the variance is calculated or interpreting the variance. In other words, a possible reason for an unfavorable direct labor efficiency variance is not that you used more direct labor hours than expected for the actual output but a possible reason why you used more direct labor hours than you expected. Datail chawan Niestial As shown above, the Retail Stores division generated approximately $575,000 less in operating income than expected for Q3 2022 while the Online Sales division generated approximately $135,000 more in operating income than expected. Kimberly, the manager for the Retail Stores division has argued that evaluating her division's Q3 2022 results based on expected operating income does not accurately reflect her division's performance. When asked to explain these results Kimberly made the following statement: "While our bottom line is lower than we expected, there are several reasons why this does not reflect my division's underlying performance. When generating the budgeted numbers for my division, the amount of sales was the only number that I had significant input for and as you can see my division actually generated more in total sales for the quarter than was expected. Many of the other budgeted numbers for my division such as the costs for the internally manufactured items are outside of my control as division manager. Also, I do not believe the way fixed selling and administrative costs are allocated to my division is fair. These costs are allocated on the basis of the number of employees in the two divisions which means that since my division requires more employees to staff the retail stores, my division will always receive a much higher allocation of fixed selling and administrative costs than the online sales division which will make their performance look better in comparison to mine." To better evaluate each division managers' performance top management wishes to put together a more in-depth and complete variance analysis for Q3 2022. To do so they have put together the following information underlying the budgeted expectations and the actual results for the quarter: Additional Information Part A: Create a flexible budget for each division (include all income statement items). Part B: Calculate the following variances for each division and state whether each is favorable or unfavorable: - Overall static budget variance - Overall flexible budget variance - Sales activity variance (one for resale items and one for manufactured items) - Sales price variance (one for resale items and one for manufactured items) - Direct materials price variance - Direct materials efficiency variance - Direct labor rate variance - Direct labor efficiency variance - Variable overhead spending variance - Variable overhead efficiency variance - Fixed overhead spending variance - Direct cost variance for the resale items (this variance is based on the expected versus the actual cost per resale item) - Variable selling cost variance (this variance is based on the expected versus the actual variable selling cost per item). Note: The actual and budgeted amounts per unit are expected to differ for items sold across the two divisions. Part C: Select 4 variances for each division that you've calculated in Part B and provide at least two possible reasons for these 8 variances. Note a possible reason for the variance is not simply restating how the variance is calculated or interpreting the variance. In other words, a possible reason for an unfavorable direct labor efficiency variance is not that you used more direct labor hours than expected for the actual output but a possible reason why you used more direct labor hours than you expected. Datail chawan Niestial As shown above, the Retail Stores division generated approximately $575,000 less in operating income than expected for Q3 2022 while the Online Sales division generated approximately $135,000 more in operating income than expected. Kimberly, the manager for the Retail Stores division has argued that evaluating her division's Q3 2022 results based on expected operating income does not accurately reflect her division's performance. When asked to explain these results Kimberly made the following statement: "While our bottom line is lower than we expected, there are several reasons why this does not reflect my division's underlying performance. When generating the budgeted numbers for my division, the amount of sales was the only number that I had significant input for and as you can see my division actually generated more in total sales for the quarter than was expected. Many of the other budgeted numbers for my division such as the costs for the internally manufactured items are outside of my control as division manager. Also, I do not believe the way fixed selling and administrative costs are allocated to my division is fair. These costs are allocated on the basis of the number of employees in the two divisions which means that since my division requires more employees to staff the retail stores, my division will always receive a much higher allocation of fixed selling and administrative costs than the online sales division which will make their performance look better in comparison to mine." To better evaluate each division managers' performance top management wishes to put together a more in-depth and complete variance analysis for Q3 2022. To do so they have put together the following information underlying the budgeted expectations and the actual results for the quarter: Additional Information