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Gibson Medical Equipment Company makes a blood pressure measuring kit. Jason McCoy is the production manager. The production departments static budget and actual results for 2019 follow:

	Static Budget					Actual Results
Production in units	32,000 kits					33,900 kits
Direct materials		$	208,000				$	257,550
Direct labor			176,000					180,950
Variable manufacturing overhead			48,000					54,450
Total variable costs			432,000					492,950
Fixed manufacturing overhead			218,000					213,900
Total manufacturing cost		$	650,000				$	706,850

Required

a. Convert the static budget into a flexible budget.

b. Calculate the variances.

Convert the static budget into a flexible budget. (Do not round intermediate calculations.)

	Flexible Budget Production in units 33,900 Kits Direct materials Direct labor Variable manufacturing overhead Total variable costs $0 Fixed manufacturing overhead 218,000 Total manufacturing costs $218,000

Calculate the variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

	Variances Direct materials Direct labor Variable manufacturing overhead Total variable costs Fixed manufacturing overhead Total manufacturing costs

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