P8-26A Preparing a flexible budget computing standard cost variances Kyler Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Kyler allocates overhead based on yards of direct materials. The company's performance report includes the following selected data: Static Budget (1,025 recliners) Actual Results (1,005 rediners) $ 507,375 $ 487,425 54,735 54,810 92,250 Sales (1,025 recliners X $495 each) (1,005 recliners X $485 each) Variable Manufacturing Costs: Direct Materials (6,150 yds. @ $8.90/yd.) (6,300 yds. @ $8.70/yd.) Direct Labor (10,250 DLHr @ $9.00/DLHr) (9,850 DLHr @ $9.10/DLHr) Variable Overhead (6,150 yds @ $5.10/yd.) (6,300 yds. @ $6.50/yd.) Fixed Manufacturing Costs: Fixed Overhead Total Cost of Goods Sold Gross Profit 89,635 31,365 40,950 62,730 241,080 $ 266,295 64,730 250,125 $ 237,300 Flexible Budgets Requirements 1. Prepare a flexible budget based on the actual number of recliners sold. 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 Kyler's managers done a good job or a poor job controlling materials, labor, and overhead costs? Why? 4. Describe how Kyler's managers can benefit from the standard cost system