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    Flexible Budgets: Connor Company

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    7-17 Flexible budget. Connor Company's budgeted prices for direct materials, direct manufacturing labor, and direct marketing (distribution) labor per attaché case are $40, $8, $12, respectively. The president is pleased with the following performance report.
    Actual Costs Static Budget Variance
    Direct materials $364,000 $400,000 $36,000F
    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 revised performance report that uses flexible budget and a static budget.

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    Solution Summary

    The expert examines flexible budgets for Connor Company.