ATC 15-1 (Algo) Business Applications Case Static versus flexible budget variances LO 15-2, 15-3, 15-4, 15-5 John Richardson is the manufacturing production supervisor for Gibson Tool Works, a company that manufactures hand tools for mechanics. Trying to explain why he did not get the year-end bonus that he had expected, he told his wife, "This is the dumbest place I've ever worked. Last year the company set up this budget assuming it would sell 251,600 units. Well, it sold only 241,600 . The company lost money and gave me a bonus for not using as much materials and labor as was called for in the budget. This year, the company has the same 251,600 units goal and it sells 261,600 . The company's making all kinds of money. You'd think I'd get this big fat bonus. Instead, management tells me I used more materials and labor than was budgeted. They said the company would have made a lot more money if I'd stayed within my budget. I guess I gotta wait for another bad year before I get a bonus. Like I said, this is the dumbest place l've ever worked." Gibson's master budget and the actual results for the most recent year of operating activity follow. Required c. Prepare a flexible budget and recompute the budget variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)