CH 8 HW Question 4, PM8-26A (similar to) Part 1 of 7 HW Score: 20%, 2 of 10 points Points: 0 of 4 Save Root Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Root allocates overhead based on yards of direct materials. The company's performance report includes the following selected data: (Click the icon to view the selected data.) Read the requirements. Data table Requirement 1. Prepare a flexible budget based on the actual number of recliners sold Sales Root Recliners Flexible Budget Budget Amounts per Unit Actual Units (Recliners) Sales Revenue Variable Manufacturing Costs: Direct Materials Direct Labor Variable Overhead Fixed Manufacturing Costs: Fixed Overhead Total Cost of Goods Sold (1,025 recliners x $510 each) (1,005 recliners x $490 each) $ Static Budget (1,025 recliners) 522,750 Actual Results (1,005 recliners) $ 492,450 Variable Manufacturing Costs: Direct Materials (6,150 yds. @ $8.80 / yd.) (6,300 yds. @ $8.60 / yd.) 54,120 54,180 Direct Labor (10,250 DLHr @ $12.10/DLHr) (9,850 DLHr @ $12.30/DLHr) Variable Overhead (6,150 yds. @ $5.10/yd.) 124,025 121,155 31,365 (6,300 yds. @ $6.50/ yd.) 40,950 Fixed Manufacturing Costs: Fixed Overhead Total Cost of Goods Sold Gross Profit 62,730 64,730 272,240 281,015 $ 250,510 $ 211,435 Print Done Requirement 2. Compute the cost variance and the efficiency variance for direct materials and for direct labor. For manufacturing overhead, compute the variable overhead cost, variable overhead efficiency, fixed overhead cost, and fixed overhead volume variances. Round to the nearest dollar. Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) Direct materials cost variance = Direct labor cost variance = Formula Variance Next compute the efficiency variances. Select the required formulas, compute the efficiency variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) Direct materials efficiency variance Direct labor efficiency variance || = Formula || = Variance Now compute the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity; VOH = variable overhead.) VOH cost variance VOH efficiency variance = = Formula || = Variance Now compute the fixed overhead cost and volume variances. Select the required formulas, compute the fixed overhead cost and volume variances, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) FOH cost variance = FOH volume variance = Formula = Variance Requirement 3. Have Stenback's managers done a good job or a poor job controlling materials, labor, and overhead costs? Why? The variances computed in Requirement 2 suggest that the managers have done a reasonable job controlling materials and labor costs. The favorable direct materials cost variance and direct labor efficiency variance help offset the unfavorable direct labor cost variance and direct materials efficiency variance. Managers have done a poor job controlling overhead costs as evidenced by the fact that all of the overhead variances are unfavorable . Requirement 4. Describe how Stenback's managers can benefit from the standard costing system. Standard costing helps managers do the following: Prepare the master budget Set target levels of performance for flexible budgets Identify performance standards Set sales prices of products and services Decrease accounting costs