Juda Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system.

Juda allocates overhead based on yards of direct materials. The company's performance report includes the following selected data:

							Static Budget	Actual Results
							(1,000 recliners)	(980 recliners)
Sales		(1,000 recliners x			$505	each)	$505,000
		(980 recliners x			$495	each)		$485,100
Variable Manufacturing Costs:
Direct Materials		(6,000 yds. @			$8.90	/ yd.)	53,400
		(6,143 yds. @			$8.70	/ yd.)		53,444
Direct Labor		(10,000 DLHr @			$9.20	/ DLHr)	92,000
		(9,600 DLHr @			$9.40	/ DLHr)		90,240
Variable Overhead		(6,000 yds. @			$5.20	/ yd.)	31,200
		(6,143 yds. @			$6.60	/ yd.)		40,544
Fixed Manufacturing Costs:
Fixed Overhead							60,600	62,600
Total Cost of Goods Sold							237,200	246,828
Gross Profit							$267,800	$238,272

1.

Prepare a flexible budget based on the actual number of recliners sold.

Requirement 1. Prepare a flexible budget based on the actual number of recliners sold. (Round budget amounts per unit to the nearest cent.)

Juda Recliners
Flexible Budget
	Budget
	Amounts
	per Unit
Actual Units (Recliners)		980
Sales Revenue
Variable Manufacturing Costs:
Direct Materials
Direct Labor
Variable Overhead
Fixed Manufacturing Costs:
Fixed Overhead
Total Cost of Goods Sold
Gross Profit

2.

Compute the cost variance and the efficiency variance for direct materials and for direct labor. For manufacturing overhead, compute the variable overhead cost, variable overhead efficiency, fixed overhead cost, and fixed overhead volume variances. Round to the nearest dollar.

3.

Have Juda managers done a good job or a poor job controlling materials, labor, and overhead costs? Why?

4.

Describe how Juda's managers can benefit from the standard costing system.