Jael Equipment uses a flexible budget for its indirect manufacturing costs. For 20x4, the company anticipated that it would produce 18,000 units with 3,500 machine-hours and 7,200 employee days. The costs and cost drivers were to be as follows:

Fixed Variable Cost driver

Product handling $30,000 $0.40 per unit

Inspection 8,000 8.00 per 100 unit batch

Utilities 400 4.00 per 100 unit batch

Maintenance 1,000 0.20 per machine-hour

Supplies 5.00 per employee day

During the year, the company processed 20,000 units, worked 7,500 employee days, and had 4,000 machine-hours. The actual costs for 20x4 were:

Actual costs

Product handling $36,000

Inspection 9,000

Utilities 1,600

Maintenance 1,200

Supplies 37,500

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.