Flexible budget (continuation of 7-31 and 7-32). Suppose the static budget was for 24,000 units of output. The general manager is thrilled about the following report:

Actual Static Results Budget Variance Direct materials $452,880 $576,000 $123,120 F Direct manufacturing labour 211,680 288,000 76,320 F Required Is the manager’s glee warranted? Prepare a report that provides a more detailed explanation ofwhy the static budget was not achieved. Actual output was 20,000 units.

PROBLEMS