Evaluating a cost center (including flexible budgeting concepts)

Glen Howell, president of Howell Door Products Company, is evaluating the performance of Keith Ireland, the plant manager, for the last fiscal year. Mr. Howell is concerned that production costs exceeded budget by nearly $21,000. He has available the 2007 static budget for the production plant, as well as the actual results, both of which follow:

Required

a. Convert the static budget into a flexible budget.

b. Use the flexible budget to evaluate Mr. Ireland’s performance.

c. Explain why Mr. Ireland’s performance evaluation doesn’t include sales revenue and net income.