Relaxing Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Relaxing 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.
3. Have Relaxing’s managers done a good job or a poor job controlling materials, labor, and overhead costs? Why?
4. Describe how Relaxing’s managers can benefit from the standard costingsystem.

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Static Budget Actual Results (975 recliners) (955 recliners) Sales (975 recliners x $505) 492,375 (955 recliners x $485) $ 463,175 Variable Manufacturing Costs Direct Materials (5,850 yds. @ $8.90yard) (6,000 yds. $8.70yard) (9,750 hrs$9.00hour) (9,350 hrs9.10hour) Variable Overhead (5,850 yds $5.30yard) (6,000 yds. $6.70yard) 52,065 52,200 Direct Labor 87,750 85,085 31,005 40,200 Fixed Manufacturing Costs: Fixed Overhead Total Cost of Goods Sold Gross Profit 60,255 231,075 261,300 62,255 239,740 $ 223,435