Evaluating a cost center including flexible budgeting concepts Smiley Medical Equipment Company makes a blood pressure measuring kit. Elbert Jackson is the production manager. The production department's static budget and actual results for 2012 follow.

Required
a. Convert the static budget into a flexible budget.
b. Use the flexible budget to evaluate Mr. Jackson's performance.
c. Explain why Mr. Jackson's performance evaluation does not include sales revenue and net income.

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Static Budget Actual Results Production in units Direct materials Direct labor Variable manufacturing overhead Total variable costs Fixed manufacturing overhead Total manufacturing cost 30,000 kits 32,000 kits $262,000 185,600 $210,000 48,000 438,000 210,000 54,000 501,600 205,000 $648,000 $706,600