Cutler Ridge Company prepared the following performance report for September. Cutler Ridge would like you to prepare the flexible budget and help them understand the results of operations.

Actual Master

Results Budget

Sales volume (in units) 60,000 56,000

Manufacturing costs:

Direct materials $285,000 $252,000

Direct labor $94,000 $89,600

Variable overhead 120,000 126,000

Fixed manufacturing suppot 310,000 299,600

Total $ 809,000 $ 767,200

Required:

Prepare the flexible budget for Cutler Ridge based on the information provided above. Calculate the flexible budget variances for each cost item as well as the total variance. Indicate whether the variances are favorable or unfavorable.

Which variances require the attention of management? Explain.