Static Budget	Actual Results
								(1,000 recliners)	(980 recliners)
Sales	(1,000 recliners x		$505					$505,000
	(980 recliners x		$475						$465,500
Variable manufacturing costs:
Direct materials			(6,000 yds @		$8.80			52,800
			(6,150 yds @		$8.60	)			52,890
Direct labor		(10,000 hrs. @			$9.40	)		94,000
		(9,600 hrs. @			$9.55	)			91,680
Variable overhead			(6,000 yds @			$5.20	)	31,200
			(6,150 yds @			$6.60	)		40,590
Fixed manufacturing costs:
Fixed overhead								60,600	62,600
Total cost of goods sold								238,600	247,760
Gross profit								$266,400	$217,740

Cole Recliners
Manufacturing Overhead Variances
Total overhead variance:
Actual overhead cost
Standard overhead allocated to production
Total overhead variance
Overhead flexible budget variance:
Actual overhead cost
Flexible budget overhead for actual outputs
Overhead flexible budget variance
Production volume variance:
Flexible budget overhead for actual outputs
Standard overhead allocated to production
Production volume variance

Requirement 3. The variances computed in Requirement 2 suggest that the managers have done a

good

poor

reasonable

job controlling materials and labor costs. The

favorable

unfavorable

direct materials price variance and direct labor efficiency variance help offset the

favorable

unfavorable

direct labor price variance and direct materials efficiency variance.