solved Question 1: Prepare a static budget in Excel for Vroom-Vroom

Question 1: Prepare a static budget in Excel for Vroom-Vroom based on 200,000 units produced. (32 points)a) Show the static budget for January in Contribution Margin Income Statement format – be sure to list out each expense line.b) Compare January’s static budget to January’s actual results. Specify which line items are favorable or unfavorable and how much. Provide potential explanations for each of the variable costs. Note: Saying that an item was above or below budget is NOT an explanation. You need to include potential (made-up) reasons. c) Show the static budget for February in Contribution Margin Income Statement format – be sure to list out each expense line.d) Compare February’s static budget to February’s actual results. Specify which line items are favorable or unfavorable and how much. Provide potential explanations for each of the variable costs. Note: Saying that an item was above or below budget is NOT an explanation. You need to include potential (made-up) reasons.Question 2: Prepare a flexible budget in Excel for Vroom-Vroom. (32 points)a) Show the flexible budget for January in Contribution Margin Income Statement format – be sure to list out each expense line.b) Compare January’s flexible budget to January’s actual results. Specify which line items are favorable or unfavorable and how much. Provide potential explanations for each of the variable costs. Note: Saying that an item was above or below budget is NOT an explanation. You need to include potential (made-up) reasons.c) Show the flexible budget for February in Contribution Margin Income Statement format – be sure to list out each expense line.d) Compare February’s flexible budget to February’s actual results. Specify which line items are favorable or unfavorable and how much. Provide potential explanations for each of the variable costs. Note: Saying that an item was above or below budget is NOT an explanation. You need to include potential (made-up) reasons.Question 3: Analyze the differences between static and flexible budgets. (34 points)a) What is the difference between static and flexible budgets in theory? b) What are the differences between the static and flexible budgets for Vroom-Vroom: what variances are different and by how much? What does this tell us?c) What are the pros and cons for each – static and flexible budgets?d) Write a letter to Vroom-Vroom’s CFO. Explain the results in January and February. Provide your recommendation for either static or flexible budgets. Provide explanations and backup for your recommendation. Note: A letter to the CFO should have correct spelling and grammar, and is expected to be approximately 400 words. Thorough explanations with backup are required.Extra Credit: (6 points)a) Using the static budget for January in Question 1 (compared to January actual results), calculate the price variance and volume variance for raw materials.b) The case study also includes an analysis portion, and asks you to provide possible explanations. Naturally, without working within the company, you wouldn’t be able to ask questions. The idea is for you to provide explanations of what could have happened. For example, for a pancake company, if sales increased significantly on a per-unit basis, you could provide an explanation about a pancake-breakfast family reunion that needed a huge shipment of pancakes and was willing to pay a premium (higher price per box). I’m looking to be sure that the explanation fits the results (if you explained a sales increase per box by saying the company gave a good customer a big discount, that would be incorrect). Feel free to be creative.c) There is also one EXTRA CREDIT question. This is based on the material within Chapter 10, which we aren’t specifically covering in this course. No penalty for skipping this – but the potential for extra points if you complete it correctly. The remainder of the case study is based on Chapters 8 & 9, which we’ve already covered in Weeks 4 & 5.