Consider the following data collected for Great Homes, Inc.:

Direct Materials Direct Manufacturing Labor

Cost incurred: Actual inputs $200,000 $90,000

actual prices

Actual inputs *standard prices 214,000 86,000

Standard inputs allowed for actual output *standard prices 225,000 80,000

Required:

Compute the following:

(Compute the price, efficiency, and flexible-budget variances for direct materials and direct manufacturing laborasshownbelow)

1.Direct Material Price Variance, Efficiency Variance andtotalDirect Material Variance

2.DirectLabourRate Variance, Efficiency Variance andtotalDirectLabourVariance

3.Why is the purpose of analyzing variancesagainst thebudget?

4.Explain what is a flexible budget