Question: Bahrain Company's budgeted prices for direct materials, direct manufacturing labor and direct marketing labor per handbag are $38.50, $5.25, and $11.25 respectively. The president of the company is pleased with the following performance report: Actual Results Static Budget Static-budget Variances Direct Materials $410,000 $423,500 $13,500 F Direct Manufacturing Labor $56,500 $57,750 $1,250 F Direct Marketing Labor $119,000 $123,750 $4,750 F Total Direct Costs $585,500 $605,000 $19,500 F The actual output was 10,500 handbags. Assume all three direct-cost items shown are variable costs. Required: 1) Prepare a revised performance report that uses a flexible budget and a static budget. (i.e. you need to use a performance report format which would show: Actual results, Flexible-budget variances, Flexible budget, Sales-volume variances and Static budget). 2) Based on your results in requirement (1), is the president's satisfaction with the above-shown performance report justified? Explain.