7-23 Flexible-budget preparation and analysis. XYZ Printers, Inc., produces luxury checkbooks with three checks and stubs per page. Each checkbook is designed for an individual customer and is ordered through the customer's bank. The company's operating budget for September 2017 included these data Number of checkbooks 20,000 Selling price per book $ 22 Variable cost per book $ 9 Foxed costs for the month $150,000 The actual results for September 2017 were as follows: Number of checkbooks produced and sold 15,000 Average selling price per book $ 23 Variable cost per book $ 8 Fixed costs for the month $155,000 The executive vice president of the company observed that the operating income for September was much lower than anticipated, despite a higher-than-budgeted selling price and a lower than-budgeted variable cost per unit. As the company's management accountant, you have been asked to provide explanations for the disappointing September results. XYZ develops its flexible budget on the basis of budgeted per-output-unit revenue and per-output-unit variable costs without detailed analysis of budgeted inputs. 1. Prepare a static-budget-based variance analysis of the September performance 2. Prepare a flexible-budget-based variance analysis of the September performance, 3. Why might XYZprinters find the flexible-budget-based variance analysis more informative than the static-budget-based variance analysis? Explain your answer. 7-22 Flexible budget. Beta Company's budgeted prices for direct materials, direct manufacturing labor, and direct marketing distribution) labor per luxury wallet are $41, S5, and $11, respectively. The president is pleased with the following performance report Actual Costs Static Budget Variance Direct materials $373,500 $410,000 $36,500 F Direct manufacturing labor 48,600 50.000 1,400 F Direct marketing (distribution) labor 103,500 110,000 6,500 F Actual output was 9,000 luxury wallets. Assume all three direct-cost items shown are variable costs. Is the president's pleasure justified? Prepare a revised performance report that uses a flexible budget and a static budget 7-30 Materials and manufacturing labor variances, standard costs. Dunn, Inc., is a privately held furniture manufacturer. For August 2017, Dunn had the following standards for one of its products, a wicker chair Standards per Chair Direct materials 2 square yards of input at $5 per square yard Direct manufacturing labor 0.5 hour of input at $10 per hour The following data were compiled regarding actual performance actual output units chairs) produced, 2,000 square yards of input purchased and used, 3.700 price per square yard. SS. 10, direct manufacturing labor costs, S8,820actual hours of input, 900, labor price per hour, 59.80 1. Show computations of price and efficiency variances for direct materials and direct manufacturing labor. Give a plausible explanation of why each variance occurred. 2 Suppose 6,000 square yards of materials were purchased at $5.10 per square yardi, even though only 3.700 square yards were used. Suppose further that variances are identified at their most timely control point, accordingly, direct materials price variances are isolated and traced at the time of purchase to the purchasing department rather than to the production department Compute the price and efficiency variances under this approach