Lawson, Inc. produces plastic grocery bags. Lawson has developed a static budget for the month of July based on 8,000 direct labor hours. During the quarter, the actual activity was 9,000 direct labor hours. Data for July are summarized as follows: Static budget(8,000 hours) Actual costs(9,000 hours)
Direct materials cost $96,000 $118,000
Power 40,000 47,000
Salary of plant supervisor 6,000 6,000
Total $142,000 $171,000

Comparing the static budget to the actual costs, we can conclude that:

a. the manager spent more than should have been spent.
b. immediate action is needed to reduce costs.
c. the plant manager was clearly not efficient.
d. the plant manager should be dismissed.
e. None of these.

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