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Root Recliners Flexible Budget Budget Amounts per Unit Actual Units (Recliners) 980 Sales Revenue $ 495.00 $ 485,100 Variable Manufacturing Costs: Direct Materials 52.20 51,156 Direct Labor 92.00 90,160 Variable Overhead 31.20 30,576 Fixed Manufacturing Costs: Fixed Overhead 60,600 232,492 Total Cost of Goods Sold $ 252,608 Gross Profit 2. Compute the cost variance and the efficiency variance for direct materials and for direct labor. For manufacturing overhead, compute the variable overhead cost, variable overhead efficiency, fixed overhead cost, and fixed overhead volume variances. Round to the nearest dollar. Have Root's managers done a good job or a poor job controlling materials, labor, and overhead costs? Why? Describe how Root's managers can benefit from the standard costing system. 3. 4. Formula Variance Direct materials efficiency variance Direct labor efficiency variance = = (AC - SC) X AQ (AC - SC) x SQ (AQ - SQ) X AC (AQ - SQ) x SC Actual FOH - Allocated FOH Actual FOH - Budgeted FOH Budgeted FOH - Allocated FOH Static Budget Actual Results (1,000 recliners) (980 recliners) $ 495,000 470,400 52,200 52,216 Sales (1,000 recliners x $ 495 each) (980 recliners x $ 480 each) Variable Manufacturing Costs: Direct Materials (6,000 yds. @ $ 8.70 / yd.) (6,143 yds. @ $ 8.50 / yd.) Direct Labor (10,000 DLHr @ $ 9.20 / DLHr) (9,600 DLHr @ $ 9.30 / DLHr) Variable Overhead (6,000 yds. @ $ 5.20 / yd.) (6,143 yds. @ $ 6.60 / yd.) Fixed Manufacturing Costs: 92,000 89,280 31,200 40,544 Fixed Overhead 60,600 62,600 Total Cost of Goods Sold 236,000 244,640 259,000 $ 225,760 Gross Profit