Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. allocates overhead based on yards of direct materials. The company's performance report includes the following selected data:

Requirement 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.

Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.)

Now compute the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity; VOH = variable overhead.)

Now compute the fixed overhead cost and volume variances. Select the required formulas, compute the fixed overhead cost and volume variances, and identify whether each variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.)

Requirement 3. Have 's managers done a good job or a poor job controlling materials, labor, and overhead costs? Why?

The variances computed in Requirement 2 suggest that the managers have done a _______ (good, poor

and reasonable) job controlling materials and labor costs. The _______ (favorable

unfavorable)direct materials cost variance and direct labor efficiency variance help offset the _____ ( favorable, unfavorable)

direct labor cost variance and direct materials efficiency variance. Managers have done a _____( good, poor, reasonable)

job controlling overhead costs as evidenced by the fact that ______(all, none, some)of the overhead variances are ____ (favorable

unfavorable).

Direct materials efficienoy vatiance Direct labor efficiency variance = Now compute the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead foced overhead; SC = standard cost; SQ= standard quantity; VOH= variable overhead.) Data table 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 Root's managers done a good job or a poor job controlling materials, labor, and overhead costs? Why? 4. Describe how Root's managers can benefit from the standard costing system. Requir emerk 2. Com pute the cot variance and the eff dency variance for direct in aterials and for direct Iabor. For m anutacturing overhead, c Begin with the cost varianoes. Select the required formulas, compute the cost variances for direct in aterial sand direct labor, and identify wheth sandard quartity.) Formula Variance Dired materials cot yainance = Dired labor cost variance = Next compute the efficiency varian tandard cos; SO = standard quan (ACSC)AQ the efficiency variances for direct materials and direct labohynd Direct materialse ficiency (AC=SC)SQ variance Dired labor efficiency variance (AQSQ)AC Now compute the variable overhes (AQSQ)SC Ixed overhead; SC = standard cos Actual FOH - Allocated FOH VOH cost variance Actual FOH - Budgeted FOH VOH effidency variance = Budgeted FOH - Alocated FOH Now compute the fixed overhead c SC - tandard cos; SQ = standord Variance ed fomn uas com pute the fixed overhead cost and volume van ar equired formulas, compute the variable overhead cost and effa crhead) it ance Requirement 1. Prepare a flesible budget based on the actual number of recliners sold. (Round budget amountsper unit to the neares cent.) Root Reclineis Flexible Budget Budget Amounts per Unit Actual Units (Recliners) Sales Revenue Variable Manufactuning Costs Direct Maferials Direct Labor Variable Ore thead Fired Manufacturing Coiss Fined Orethead Total Cot of Goods Sold Giose Prefit Formula Variance Direct materials cost vatiance = Direct labor cost variance = Next compute the efficiency variances. Select the required formulas, compute the efficiency variances for direct materials and direct labor, and identify ouh standard cost; SQ = standard quantity) Formula Variance Direct materials etficiency variance Direct labor efficiency vafiance = Now compute the variable overhead cost and efficiencrvariances Select the required formulas, compute the variable overhead cost and eftioiency varian foced overhead; SC = standard cost: SQ= standard quantity; VOH= variable overhead.) Now compute the fixed overhead cost and volume variancess Select the required formulas, oompute the foced overhead cost and volume variances, and id SC= standard cort; 9Q = standard quantity) Requirement 4. Describe how Root's managers can benefit from the standard costing system Standard costing helps managers do the following: Create new products Decrease accounting costs Develop more efficient production methods Identify perform ance standards Increase production levels Increase sales volume Prepare the master budget Set sales prices of products and services Set target levels of perform ance for flexible budgets