Beta Company’s budgeted prices for direct materials, direct manufacturing labor,and direct marketing (distribution) labor per luxury wallet are \($41,\) \($5,\) and \($11,\) respectively. The president is pleased with the following performance report:

Actual output was 9,000 luxury wallets. Assume all three direct-cost items shown 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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Actual Costs Static Budget Variance Direct materials $373,500 $410,000 $36,500 F Direct manufacturing labor 48,600 50,000 1,400 F Direct marketing (distribution) labor 103,500 110,000 6,500 F