Reference no: EM131788535

Question - Connor Company's budgeted prices for direct materials, direct manufacturing labor, and direct marketing (distribution) labor per attaché'case 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                   80,000                        2,000 F

Direct marketing (Distribution) labor              110,000                 120,000                      10,000 F

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.