Flexible budget. Conner Company’s budgeted prices for direct materials, direct manufacturing labor, and direct marketing (distribution) labor per attache 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. 

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

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Static Budget S400,000 80,000 120,000 Variance $36,000 F 2,000 F 10,000 F Actual Costs Direct materials Direct manufacturing labor Direct marketing (distribution) labor $364,000 78,000 110,000