White Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. White

allocates overhead based on yards of direct materials. The company's performance report includes the following selected data:

v Fixed Manufacturing Costs: Actual Units (Kecliners) Sales Revenue Variable Manufacturing Costs: Direct Materials Direct Labor Variable Overhead Fixed Manufacturing Costs: Fixed Overhead Total Cost of Goods Sold Gross Profit Next compute the efficiency variances. Select the required formulas, compute the efficiency variances for direct mate favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC = actual standard cost; SQ= standard quantity.) Now compute the fixed overhead cost and volume variances. Select the required formulas, compute variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbrev SC= standard cost ;SQ= standard quantity.) Requirement 3. Have White's managers done a good job or a poor job controlling materials, labor, and overhead costs? Why? The variances computed in Requirement 2 suggest that the managers have done a job controlling materials and labor costs. The direct materials cost variance and direct labor efficiency variance help offset the direct labor cost variance and direct materials efficiency variance. Managers have done a job controlling overhead costs as evidenced by the fact that of the overhead variances are Requirement 4. Describe how White's managers can benefit from the standard costing system. Standard costing helps managers do the following: Create new products Decrease accounting costs Develop more efficient production methods Identify performance standards Increase production levels Increase sales volume Prepare the master budget Set sales prices of products and services Set target levels of performance for flexible budgets v Fixed Manufacturing Costs: Actual Units (Kecliners) Sales Revenue Variable Manufacturing Costs: Direct Materials Direct Labor Variable Overhead Fixed Manufacturing Costs: Fixed Overhead Total Cost of Goods Sold Gross Profit Next compute the efficiency variances. Select the required formulas, compute the efficiency variances for direct mate favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbreviations used: AC = actual standard cost; SQ= standard quantity.) Now compute the fixed overhead cost and volume variances. Select the required formulas, compute variance is favorable (F) or unfavorable (U). (Round your answers to the nearest whole dollar. Abbrev SC= standard cost ;SQ= standard quantity.) Requirement 3. Have White's managers done a good job or a poor job controlling materials, labor, and overhead costs? Why? The variances computed in Requirement 2 suggest that the managers have done a job controlling materials and labor costs. The direct materials cost variance and direct labor efficiency variance help offset the direct labor cost variance and direct materials efficiency variance. Managers have done a job controlling overhead costs as evidenced by the fact that of the overhead variances are Requirement 4. Describe how White's managers can benefit from the standard costing system. Standard costing helps managers do the following: Create new products Decrease accounting costs Develop more efficient production methods Identify performance standards Increase production levels Increase sales volume Prepare the master budget Set sales prices of products and services Set target levels of performance for flexible budgets