Teecorp Company uses a flexible budget for its indirect manufacturing costs. For 2015, the company anticipated that it would produce 27,000 units with 4,800 machine-hours and 8,000 employee days. The costs and cost drivers were to be as follows:

Fixed Variable Cost driver

Product handling $45,000 $0.75 per unit

Inspection 12,000 12.00 per 100 unit batch

Utilities 600 6.00 per 100 unit batch

Maintenance 1,250 0.25 per machine-hour

Supplies 5.00 per employee day

During the year, the company processed 26,500 units, worked 8,200 employee days, and had 4,850 machine-hours. The actual costs for 2015 were:

Actual costs

Product handling $65,000

Inspection 16,200

Utilities 2,220

Maintenance 2,850

Supplies 39,900

Required:

a. Prepare the static budget using the overhead items above and then compute the static-budget variances.

b. Prepare the flexible budget using the overhead items above and then compute the flexible-budget variances.