Requirement 1. Prepare the flexible budget for actual outputs.

Sales revenue

Variable manufacturing costs:

Direct materials

Direct labor

Variable overhead

Fixed costs

Fixed overhead

Total cost of goods sold

Gross profit

Direct materials	$
Direct labor	$

Requirement 2. Let's first compute the price variances for direct materials and direct labor and select if the amount is favorable or unfavorable. (Round your answers to the nearest whole dollar.)

Next compute the efficiency variances for direct materials and direct labor and select if the amount is favorable or unfavorable. (Round your answers to the nearest whole dollar.)

Direct materials	$
Direct labor	$

Data Table

Static Budget

Actual Results

(1,025 recliners)

(1,005 recliners)

Sales

(1,025 recliners x

$495

)

$507,375

(1,005 recliners x

$485

)

$487,425

Variable manufacturing costs:

Direct materials

(6,150 yds @

$8.80

)

54,120

(6,300 yds @

$8.60

)

54,180

Direct labor

(10,250 hrs. @

$9.00

)

92,250

(9,850 hrs. @

$9.20

)

90,620

Variable overhead

(6,150 yds @

$5.10

)

31,365

(6,300 yds @

$6.50

)

40,950

Fixed manufacturing costs:

Fixed overhead

62,730

64,730

Total cost of goods sold

240,465

250,480

Gross profit

$266,910

$236,945