Eko Dynamics Nigeria Limited (EDNL) is a manufacturing company based in Ikeja, Lagos, specializing in the production of industrial plastic packaging containers. The company operates a standard costing and budgetary control system. For the first quarter (Q1) ending March 31, 2024, the budget committee approved a master budget based on a planned production and sales volume of 10,000 units. The standard cost card for a unit of plastic container is as follows: - Direct Material (Polypropylene resin): 2 kg at ₦1,500 per kg = ₦3,000 - Direct Labour: 1.5 hours at ₦1,200 per hour = ₦1,800 - Variable Production Overhead: 1.5 hours at ₦600 per hour = ₦900 - Fixed Production Overhead: Absorbed on direct labour hour basis at ₦333.33 per hour (₦5,000,000 total quarterly budget / 15,000 direct labour hours) = ₦500 per unit Actual operational results achieved at the end of Q1 2024 were as follows: - Production and sales achieved: 9,000 units - Direct Materials purchased and used: 18,900 kg at a total cost of ₦29,295,000 - Direct Labour incurred: 13,050 hours worked at a total cost of ₦16,312,500 - Variable Production Overhead incurred: ₦8,091,000 - Fixed Production Overhead incurred: ₦5,200,000 The Managing Director of EDNL expressed dissatisfaction over the direct comparison of actual costs with the original master budget, arguing that such evaluation is misleading because actual output was lower than planned. You are required to: (a) Prepare a Flexible Budget Performance Report for Q1 2024, showing the Original Master Budget (10,000 units), Flexed Budget (9,000 units), Actual Results (9,000 units), and the variance between the Flexed Budget and Actual Results. (10 marks) (b) Calculate the following sub-variances: i. Direct Material Price Variance and Direct Material Usage Variance ii. Direct Labour Rate Variance and Direct Labour Efficiency Variance iii. Fixed Overhead Expenditure Variance and Fixed Overhead Volume Variance (8 marks) (c) Explain THREE behavioral problems that may arise if EDNL's top management continues to use imposed (top-down) target budgeting, and suggest how management can mitigate these issues. (7 marks) (Total: 25 marks)