Kyler Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Kyler allocates overhead based on yards of direct materials. The company€™s performance report includes the following selected data:

Requirements
1. Prepare a flexible budget based on the actual number of recliners sold.
2. Compute the cost variance and the efficiency variance for direct materials and for direct labor. For manufacturing overhead, compute the variable overhead cost, variable overhead efficiency, fixed overhead cost, and fixed overhead volume variances. Round to the nearest dollar.
3. Have Kyler€™s managers done a good job or a poor job controlling materials, labor, and overhead costs? Why?
4. Describe how Kyler€™s managers can benefit from the standard cost system.

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Static Budget (1,025 recliners) Actual Results (1,005 recliners) Sales (1,025 recliners (1,005 recliners $495 each) $485 each) 507,375 $487,425 Variable Manufacturing Costs Direct Materials (6,150 yds. $8.90/yd.) (6,300 yds. a $8.70lyd.) (10,250 DLHr $9.00/DLHr) (9,850 DLHr$9.10/DLHr) (6,150 yds. @ $5.10yd.) (6,300 yds. @ $6.50/yd) 54,735 54,810 Direct Labor 92,250 89,635 Variable Overhead 31,365 40,950 Fixed Manufacturing Costs: Fixed Overhead Total Cost of Goods Sold Gross Proft 62,730 241,080 $ 266,295 64,730 250,125 237,300