Flexible Budgets summary data are from a performance report for Sterling Company for May, during which $21,600$ units were produced. The budget reflects the company normal capacity of $22,500$ units .Actual Cost Budget$21,60022,500$ Variances units$ Type Direct material$$410,400$$$420,000$$$(9,600)$Favorable Direct labor$831,600840,000(8,400)$Favorable Variable overhead$295,200288,0007,20\mathrm{0 }$Unfavorable Fixed overhead$217,200216,0001,200$ Unfavorable Total$$1,754,400$$$1,764,000$$$(9,600)$a$.$ Prepare a new performance report using flexible budgeting. Round all amounts to the nearest dollar.ActualFlexibleVarianceCostsBudget$TypeDirect materialDirect laborVariable overheadFixed overheadTotalsb. Which of the two performance reports should Sterling Company management use to measurethe company's operating efficiency in May? 

 

Using Flexible Budgets

The following summary data are from a performance report for Sterling Company for May, during $22,500$ units.

a$.$ Prepare a new performance report using flexible budgeting. Round all amounts to the nearest do

Actual

Flexible

Variance