Requirement D (4 points): At the end of the second quarter in 2021, you instructed staffs in Financial Office to prepare the following variance analysis for Taipei Center: U V W X Static Budget for Each Quarter First Quarter Second Quarter 2 Based on 2021 2021 Results 2021 Results 3 Units 4,000 4.400 4,800 4 Selling price $ 70 $ 72 $ 71.50 5 Sales $280,000 $316,800 $343,200 6 Variable costs 7 Direct materials 50,160 58,696 57,600 8 Direct manufacturing labor 24,000 27,456 30,240 9 Other variable costs 40,000 44,000 47,280 10 Total variable costs 114,160 130,152 135, 120 11 Contribution margin 165,840 186,648 208,080 12 Fixed costs 68,000 66,000 68,400 13 Operating income $ 97,840 $120.648 $139,680 Second- Flexible Quarter Flexible Budget for Sales 202 1 Budget Second Volume Static Actuals Variance Quarter Variance Budget (1) (2)-(1)-3 (3) (4)=(3 -(5) (5) Units 4,800 4,800 800 F 4,000 Selling price $ 71.50 70.00 70.00 Sales $343.200 $7.200 F $336,000 $56.000 F $280.000 Variable costs Direct materials 57.600 2.592 F 60.192 10,032 U 50,160 Direct manuf. labor 30,240 1,440 U 28,800 4,800 U 24,000 Other variable costs 47.280 720 F 48.000 8.000 U 40.000 Total variable costs 135,120 1.872 F 136,992 22.832 U 114.160 Contribution margin 208,080 9,072 F 199,008 33,168 F 165,840 Fixed costs 68.400 400 68,000 0 68.000 Operating income $139.680 $8.672 F $131,008 $33,168 F $ 97,840 4,800 units x 2.2 lbs. per unit x $5.70 per lb. = $60,192 "4.800 units x 0.5 hrs. per unit x $12 per hr. = $28,800 4,800 units x $10 per unit = $48,000 3 Actual Flexible Second- Input Budget Quarter Quantity for 2021 Price x Budgeted Efficiency Second Actual Variance Price Variance Quarter Direct materials $57,600 $2,880 U $54,720 $5,472 F $60,192 Direct manuf. labor (DML) 30,240 4,320 U 25,920 2,880 F 28,800 * 4,800 units x 2 lbs. per unit x $5.70 per lb. = $54,720 b 4,800 units x 0.45 DML hours per unit * $12 per DML hour = $25,920 Using the above variance analysis, the CEO evaluates and rewards (or punishes) Taipei Center's cost control performance with respect to direct material and direct labor for the second quarter of 2021. Alert CEO about any potential budgetary slacks by particular managers and propose solutions to address this