A. Prepare a performance evaluation report that uses a flexible and a static budget. Please assume that all the costs are variable. (The variance analysis detail is not required for this question).

B. Is the vice-president’s satisfaction justified (answer after you complete part a.)?

The budgeted costs for Connor Company for direct materials, direct production labor and direct distribution labor are $40, $8 and $12, respectively. The vice- president is deeply satisfied with the following performance report: Master Real Static Variation Costs Budget Direct Materials $364,000 $400,000| $36,000 F DL 78,000 80,000 2,000 F Production DL 110,000 120,000 10,000 F Distribution The real number of units produced was 8,000.