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The budgeted costs for Connor Company for direct materials, direct production labor and direct distribution labor are $40, $8 and $12, respectively. The vice-president is
The budgeted costs for Connor Company for direct materials, direct production labor and direct distribution labor are $40, $8 and $12, respectively. The vice-president is deeply satisfied with the following performance report:
| Real Costs | Master Static Budget | Variation | |
| Direct Materials | $364,000 | $400,000 | $36,000 F |
| Direct Labor Production | 78,000 | 80,000 | 2,000 F |
| Direct Labor Distribution | 110,00 | 120,000 | 10,000 F |
Real number of units produced: 8,000
a. Prepare a performance evaluation report that uses a flexible and a static budget. Please assume that all the costs are variable. (The variance analysis detail is not required for this question).
b. Is the vice-presidents satisfaction justified?
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