Flannery Muffler Shop has budgeted to repair 10,000 mufflers during 2010. Each repair job takes 11⁄2 hours, and employees are paid $12 per hour. During 2010, Flannery actually repaired 9,425 mufflers, and the salary expense amounted to $179,000.

1. Assuming a static budget, use the information to prepare a performance report for Flannery for 2010.

2. Assuming a flexible budget, use the information to prepare a performance report for Flannery for 2010.

3. Interpretive Question: The manager of the muffler shop believes he deserves a bonus because the actual wage expense ($179,000) was less than budgeted. Do you agree? Explain.