SrarDares Ltd produces personalised T-shirts. Each shirt is designed for an individual customer and is ordered over the internet. The company's operating budget for September included these data: Number of shirts 25000, Selling price per shirt $18, Variable cost per shirt $10.50, Fixed costs for the month $105000. The actual results for September were: Number of shirts produced abd sold 19500, Average selling price per shirt $15.50, Variable cost per shirt $9.50, Fixed costs for the month $95000. The CEO of the company observed that the operating profit for September was much lower than anticipated, despite a higher than budgeted selling price and a lower than budgeted variable cost per unit. As the company's management accountant, you have been asked to provide explanations for the disappointing September results. Management develops its flexible budget on the basis of budgeted per-output-unit revenue and per-output-unit variable costs without detailed analysis of budgeted inputs.
Required, 1, Prepare a static-budget-based variance analysis of the September performance. 2, Prepare a flexible-budget-based variance analysis of the September performance. 3, Why might management find the flexible-budget-based variance analysis more infomative than the static-budget-based variance analysis? Explain your answer.