Reference no: EM132706866

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

Problem 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.