Connor Company's budgeted prices for direct materials, direct manufacturing labor, and direct marketing (distribution) labor per attach case are $43, $8, and $12, respectively. The president is pleased with the following performance report:

Actual Costs

Static Budget

Variance

Direct materials

$411,700

$447,200

$35,500 F

Direct manufacturing labor

80,800

83,200

2,400 F

Direct marketing (distribution) labor

Actual output was 9,000 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. 116,300 124,800 8,500 F

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.)

Sales-Volume		Static
Variance		Budget

Is the president's pleasure justified?

The existing performance report is a

Level 1

Level 2

analysis, based on a static budget. It makes

an adjustment

no adjustment

for changes in output levels.

The existing performance report shows a		total direct cost variance of			. The flexible-budget
variance shows each direct cost category to have a(n)			variance indicating		efficient use of each direct
cost item than was budgeted, or the use of		direct cost items than was budgeted, or both.

The revised performance report reveals that this variance is due to the

decrease

increase

in output units from the amount budgeted. The president should analyze the

efficiency variances

price variances

price and efficiency variances

for each cost category to assist in identifying the causes.