Connor Company's budgeted prices for direct materials, direct manufacturing labor, and direct marketing (distribution) labor per attach case are $40, $ 8, and $ 12 respectively. The president is pleased with the following performance report:

	Actual Costs	Static Budget	Variance
Direct materials	$ 364,000	$ 400,000	$ 36,000	F
Direct manufacturing labor	78,000	80,000	2,000	F
Direct marketing (distribution) labor	110,000	120,000	10,000	F

Actual output was 8,800 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
	Results
Output units
Direct materials
Direct manufacturing labor
Direct marketing labor
Total direct costs