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McKnight Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Mcknight allocates overhead based on yards of direct materials. The company's performance report includes the following selected data: (Click the icon to view the selected data.) Read the tequirements. (5,987 yds.@\$8.70/yd.) 52,087 Direct Labor (9,750DLHr@\$11.50/DLHr) (9,350 DLHr@ $11.70/DLHr) 112,125 Variable Overhead (5,850 yds.@ $5.30/ yd.) 31,005 (5,987yds.@\$6.70/yd.) 109,395 Fivad Manufacturina Cacte: 40,113 Data table McKnight Recliners Flexible Budget Budget Amounts per Unit Actual Units (Recliners) Sales Revenue Variable Manufacturing Costs: Direct Materials Direct Labor Wariahlo Nushonart Requirement 2. Compute the cost variance and the efficiency variance for direct materials and for direct labor. For manufacturing overnead, compute the variable overhead cost, variable overhead efficiency, fixed overhead cost, and foxed overhead volume variances. Round to the nearest dollar. Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each varianco is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar: Abbreviations used: AC = actual cost: AQ= actual quantity; FOH= fixed overhead; SC= standard cost; SQ = standard quantity.) Formula Variance Direct materials efficiency variance = Direct labor efficiency variance = = Abbreviations used: AC= actual cost; AQ= actual quantity; FOH= fixed ove varlable overhead.) Now compute the fixed overhead cost and volume variances. Select the required formulas, compute the fixed overhead cost and volume variances, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole doilar. Abbreviations used: AC= actual cost; AQ= actual quantity; FOH= fixed overhead; SC= standard cost; SQ= standard quantity.) Requirement 3. Have McKnight's managers done a good job or a poor job controlling materials, labor, and overhead costs? Why? The variances computed in Requirement 2 suggest that the managers have done a job controlling materials and labor costs. The direct materials cost variance and direct labor efficiency variance help offset the direct labor cost variance and direct materials efficiency variance. Managers have done a job controlling overhead costs as evidenced by the fact that: of the overhead variances are Requirement 4. Describe how McKnight's managers can benefit from the standard costing system Standard costing holps managers do the following