Jackson Company's budgeted prices for direct materials, direct manufacturing labor, and direct marketing (distribution) labor per attach case are $38, $8, and $12, respectively. The president is pleased with the following performance report:

Actual output was 9,400 attach cases. Assume all three direct-cost items above are variable costs.

Actual Costs

Static Budget

Variance

Direct materials

$368,300

$402,800

$34,500 F

Direct manufacturing labor

82,000

84,800

2,800 F

Direct marketing (distribution) labor

116,200

127,200

11,000 F

Requirement

Is the president's pleasure justified? Prepare a revised performance report that uses a flexible budget and a static budget.

Sales-Volume		Static
Variance		Budget

Is the president's pleasure justified?

The existing performance report is a

Level 1

Level 2

analysis, based on a static budget. It makes

an adjustment

no adjustment

for changes in output levels.

The existing performance report shows a		total direct cost variance of			. The flexible-budget
variance shows each direct cost category to have a(n)			variance indicating		efficient use of each direct
cost item than was budgeted, or the use of		direct cost items than was budgeted, or both.

The revised performance report reveals that this variance is due to the

decrease

increase

in output units from the amount budgeted. The president should analyze the

efficiency variances

price variances

price and efficiency variances

for each cost category to assist in identifying the causes.