Gibson Medical Equipment Company makes a blood pressure measuring kit. Jason McCoy is the production manager. The production departments static budget and actual results for 2019 follow:

	Static Budget					Actual Results
Production in units	35,000 kits					37,700 kits
Direct materials		$	213,500				$	268,070
Direct labor			178,500					185,770
Variable manufacturing overhead			52,500					58,450
Total variable costs			444,500					512,290
Fixed manufacturing overhead			210,000					205,200
Total manufacturing cost		$	654,500				$	717,490

Required

a. Convert the static budget into a flexible budget.

b. Calculate the variances.

Convert the static budget into a flexible budget. (Do not round intermediate calculations.)

	Flexible Budget
Production in units	37,700	Kits
Direct materials
Direct labor
Variable manufacturing overhead
Total variable costs
Fixed manufacturing overhead
Total manufacturing costs

Calculate the variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

	Variances
Direct materials
Direct labor
Variable manufacturing overhead
Total variable costs
Fixed manufacturing overhead
Total manufacturing costs