Flexible budget. (15 minutes) The budgeted prices for direct materials, direct manufacturing labour and direct marketing (distribution) labour per attaché case are EUR 40, EUR 8 and EUR 12, respectively. The chairman is pleased with the following performance report: 1258

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Direct materials Direct manufacturing labour Direct marketing (distribution) labour REQUIRED ACTUAL COSTS STATIC BUDGET VARIANCE EUR 364,000 EUR 400,000 EUR 36,000 F 78,000 80,000 2,000 F 110,000 120,000 10,000 F Actual output was 8,800 attach cases. Is the chairman's pleasure justified? Prepare a revised performance report that uses a flexible budget and a static budget. Assume all three direct costs items are variable costs.