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Requirement 1. Prepare the flexible budget for actual outputs.

Sales revenue

Variable manufacturing costs:

Direct materials

Direct labor

Variable overhead

Fixed costs

Fixed overhead

Total cost of goods sold

Gross profit

Direct materials	$
Direct labor	$

Requirement 2. Let's first compute the price variances for direct materials and direct labor and select if the amount is favorable or unfavorable. (Round your answers to the nearest whole dollar.)

Next compute the efficiency variances for direct materials and direct labor and select if the amount is favorable or unfavorable. (Round your answers to the nearest whole dollar.)

Direct materials	$
Direct labor	$

Data Table

									Static Budget	Actual Results
									(1,025 recliners)	(1,005 recliners)
	Sales	(1,025 recliners x		$495	)				$507,375
		(1,005 recliners x		$485	)					$487,425
	Variable manufacturing costs:
	Direct materials			(6,150 yds @			$8.80	)	54,120
				(6,300 yds @			$8.60	)		54,180
	Direct labor		(10,250 hrs. @			$9.00	)		92,250
			(9,850 hrs. @			$9.20	)			90,620
	Variable overhead			(6,150 yds @			$5.10	)	31,365
				(6,300 yds @			$6.50	)		40,950
	Fixed manufacturing costs:
	Fixed overhead								62,730	64,730
	Total cost of goods sold								240,465	250,480
	Gross profit		$266,910						$236,945

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