Connor Company’s budgeted prices for direct materials, direct manufacturing labour, and direct marketing (distribution) labour per attaché case are $40, $8, and $12, respectively. The president is pleased with the following performance report:

Actual output was 8,800 attaché cases. Assume all three direct cost items above are variable costs.

Required
Is the president’s pleasure justified? Prepare a revised performance report that uses a flexible budget and a static budget.