Prestons Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Preston allocates overhead based on yards of direct materials.

Please prepare a flexible budget based on the actual number of recliners sold & then (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.

Have Preston's managers done a good job or a poor job controlling materials, labor, and overhead costs? Why? Please describe Prestons how managers can benefit from the standard costing system.

Thanks in advance

Preston Recliners Flexible Budget Budget Amounts per Unit Actual Units (Recliners) Sales Revenue Variable Manufacturing Costs: Direct Materials Direct Labor Variable Overhead Fixed Manufacturing Costs: Fixed Overhead Total Cost of Goods Sold Gross Profit Static Budget (1,000 recliners) $ 500,000 Actual Results (980 recliners) 485,100 52,200 52,216 Sales (1,000 recliners x $ 500 each) (980 recliners x $ 495 each) Variable Manufacturing Costs: Direct Materials (6,000 yds. @ $ 8.70 / yd.) (6,143 yds. @ $ 8.50 / yd.) Direct Labor (10,000 DLHr @ $ 9.20 / DLHr) (9,600 DLHr @ $ 9.40 / DLHr) Variable Overhead (6,000 yds. @ $ 5.00 / yd.) (6,143 yds. @ $ 6.40 / yd.) Fixed Manufacturing Costs: 92,000 90,240 30,000 39,315 Fixed Overhead 60,000 62,000 243,771 241,329 Total Cost of Goods Sold 234,200 265,800 $ Gross Profit