Synergy Inc. produces plastic grocery bags. Synergy has developed a static budget for the month of July based on 10,000 direct labor hours. During the quarter, the actual activity was 12,000 direct labor hours. Data for July are summarized as follows:

	Static budget (10,000 hours)	Actual costs (12,000 hours)
Direct materials cost	$ 86,000	$108,000
Power	30,000	37,000
Salary of plant supervisor	7,000	7,000
Total	$123,000	$152,000

What is the flexible budget amount for July?

a.$142,000

b.$146,200

c.$171,000

d.$165,000

e.None of these choices are correct.

Wright Inc. produces leather purses. Wright has developed a static budget for the first quarter based on 25,000 direct labor hours. During the quarter, the actual activity was 30,000 direct labor hours. Data for the first quarter are summarized as follows:

	Static budget (25,000 hours)	Actual costs (30,000 hours)
Direct materials cost	$ 85,000	$ 90,000
Direct labor cost	180,000	164,000
Building rental	56,000	60,000
Total	$321,000	$314,000

Comparing the static budget to the actual outcomes, we can say:

a.direct materials variance is favorable.

b.the comparison is useful for assessing managerial efficiency.

c.direct labor variance is unfavorable.

d.a flexible budget should be used for assessing efficiency.

e.All of these choices are correct.