* 00 CH R E. Exercise 16-35 (Algo) Profit Variance Analysis (LO 16-4) Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the company to manufacture and sell 116,000 liters at a budgeted price of $195 per liter this year. The standard direct cost sheet for one liter of the preservative follows. Direct materials Direct labor (2 pounds @ $12) (0.5 hours @ $40) $24 Variable overhead is applied based on direct labor hours. The variable overhead rate is $100 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $50 per unit. All non-manufacturing costs are fixed and are budgeted at $2 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $606,000 unfavorable. The following is the actual income statement (in thousands of dollars) for the year. Sales revenue Less variable costs Direct materials Direct labor Variable overhead $21,718 2,368 060' 1,010 $ 4,468 $17,250 Total variable costs Contribution margin Less fixed costs Fixed manufacturing overhead Non-manufacturing costs Total fixed costs 1,130 1,310 $ 2,440 Operating profit $14,810 Required: Prepare a profit variance analysis. (Enter your answers in thousands of dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.) PAYNESVILLE CORPORATION Profit Variance Analysis Manufacturing Variances Non-Manufacturing Sales Price Variance Sales Activity Flexible Actual Variances Budget Variance Br $ 21,718 2,368 Sales revenue Materials Direct labor 060' ( Prev 2 of 7 Next > .......... +66 NST F4 F5 %$4 COsts Direct materials 2,368 1,090 1,010 $ 4,468 $17,250 Direct labor Variable overhead Total variable costs Contribution margin Less fixed costs ook Fixed manufacturing overhead Non-manufacturing costs Total fixed costs 1,130 1,310 $2,440 $14,810 int Operating profit ences Required: Prepare a profit variance analysis. (Enter your answers in thousands of dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.) PAYNESVILLE CORPORATION Profit Variance Analysis Manufacturing Variances Non-Manufacturing Variances Sales Price Variance Actual Flexible Sales Activity Master Budget Variance Budget Sales revenue 21,718 Materials 2,368 Direct labor 1,090 Variable overhead 1,010 Total variable costs 4,468 24 0. 24 0. Contribution margin %24 17,250 F 24 606 U 2$ Fixed costs: Manufacturing 1,130 F Non-manufacturing 1,310 Total fixed costs 2,440 F 0. Operating profits 14,810 606 U ( Prev 2 of 7 Next > ********** **** LSU %24 %24 %24 %24 ... FFF %24 %24 %24 %24