Reference no: EM132733099

Breakdown Flexible Budget

Boehringer Ingelheim budgeted prices for direct materials, direct manufacturing labor, and direct marketing (distribution) labor per bottle are $40, $8, and $ 12, respectively. The president is pleased with the following performance report:

                                                    Actual Costs                 Static Budget                Variance

Direct Materials                        $ 364,000                    $ 400,000                      $ 36,000 F

Direct Manufacturing Labor      $ 78,000                        $ 800,000                 $ 722,000 F

Direct Marketing (distr) labor      $ 110,000                     $ 120,000              $ 10,000 F

Question 1: Actual output was 8,800 bottle. Assume all three direct-cost items shown are variable costs. Is the president's pleasure justified? Revised performance report that uses a flexible budget and a static budget.