Question
Root Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Root allocates overhead based on yards of direct materials. The companys
Root Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Root allocates overhead based on yards of direct materials. The companys performance report includes the following selected data:
Requirements
R1. Prepare a flexible budget based on the actual number of recliners sold.
R2. Compute the price variance and the efficiency variance for direct materials and for direct labor. For manufacturing overhead, compute the total variance, the flexible budget variance, and the production volume variance.
R3. Have Roots managers done a good job or a poor job controlling materials and labor costs? Why?
R4. Describe how Roots managers can benefit from the standard costing system.
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