Actual Units (Recliners) 980 Sales Revenue $505.00 $494,900 Variable Manufacturing Costs: Direct Materials 51.60 50,568 Direct Labor 92.00 90,160 Variable Overhead 31.20 30,576 Fixed Manufacturing Costs: Fixed Overhead 60,600 Total Cost of Goods Sold 231,904 Gross Profit $262,996 Preparing a flexible budget computing standard cost variancesMorton Recliners manufactures leather recliners and uses flexible budgeting and a standard cost system. Morton allocates overhead based on yards of direct materials. The company’s performance report includes the following selected data:RequirementsPrepare a flexible budget based on the actual number of recliners sold. Compute the cost variance and the efficiency variance for direct materials and for direct labor. For manufacturing overhead, compute the variable overhead cost, variable overhead efficiency, fixed overhead cost, and fixed overhead volume variances. Round to the nearest dollar. Have Morton’s managers done a good job or a poor job controlling materials, labor, and overhead costs? Why?Describe how Morton’s managers can benefit from the standard cost system.

In each of the cases below, assume division x has a product that can be sold either to outside customers or to division y of the same company for use in its production process. the managers of the divisions are evaluated based on their divisional profits. case a b division x: capacity in units 200,000 200,000 number of units being sold to outside customers 200,000 160,000 selling price per unit to outside customers $ 90 $ 75 variable costs per unit $ 70 $ 60 fixed costs per unit (based on capacity) $ 13 $ 8 division y: number of units needed for production 40,000 40,000 purchase price per unit now being paid to an outside supplier $ 86 $ 74 required: 1. refer to the data in case a above. assume in this case that $3 per unit in variable selling costs can be avoided on intracompany sales. a. what is the lowest acceptable transfer price from the perspective of the selling division? b. what is the highest acceptable transfer price from the perspective of the buying division? c. what is the range of acceptable transfer prices (if any) between the two divisions? if the managers are free to negotiate and make decisions on their own, will a transfer probably take place?