Answer the following questions, reading the Case Study, Exhibits and reviewing the PP3 attachment.
1. Using the approach in PP3, develop a 2004 flexible budget, and compute the flexible - actual variances. (table and explanation paragraph)
2. Determine direct cost variances (six for Frame; four each for Wheel and Final) and two overhead variances. (Min 150 words discussing answer)
3. What is causing these variances? Do you see any patterns or relationships among the variances that suggest possible causes? (Min 150 words discussing answer)