Company's budgeted prices for direct materials, direct manufacturing labor, and direct marketing (distribution) labor per attach case are $44, $10, and $14, respectively. The president is pleased with the following performance report:

Actual output was 9,200 attach cases. Assume all three direct-cost items above are variable costs.

Requirement is the president's pleasure justified? Prepare a revised performance report that uses a flexible budget and a static budget.

Prepare a revised performance report that uses a flexible budget and a static budget. Begin with the actual results, then complete the flexible budget columns and the static budget columns. Label each variance as favorable (F) or unfavorable(U). (For variances with a $0 balance, make sure to enter "0" in the appropriate field. If the variance is zero, do not select a label.)

	Actual	Flexible Budget Variance	F or U	Flexible Budget	Sales Volume Varience	F or U?	Static Budget
Output Units
Direct Materials
Direct Manufacturing Labor
Direct Marketing Labor
Total Direct Costs:

Is the president's pleasure justified?

The existing performance report is a (level 1 or level 2?) analysis, based on a static budget. It makes (an adjustment or no adjustment?) for changes in output levels.

The existing performance report shows a (favorable or unfavorable?) total direct cost variance of (?) The flexible budget variance shows each direct cost category to have a (favorable or unfavorable?) variance indicating (less or more?) efficient use of each direct cost item that was budgeted, or the use of (less costly or more costly?) direct cost items than was budgeted. The revised performance report reveals that this variance is due to the (decrease or increase?) in output units from the amount budgeted. The president should analyze the ( efficiency variables or price variances or price and efficiency variables?) for each cost category to assist in identifying the causes.

Data Table Actual Costs Static Budget Variance Direct materials $ 432,400 $ 466,400 $34,000 F Direct manufacturing labor 103,400 106,000 2,600 F Direct marketing (distribution) labor 138,400 148,400 10,000 F Print Done