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EXHIBIT 14. 4 Breakdown of Total Operating Income Variance* SCHMIDT MACHINERY COMPANY Analysis of Financial Results For October 2019 (1) (2) ( 3 )...
1. Using text Exhibit 14.4 as a guide, complete the missing parts of the following profit report for December.
2. Based on your completed profit report, determine the dollar amount, and label (Favorable or Unfavorable) each of the following variances for December:
a. Total master (static) budget variance (also referred to as the total operating income variance for the period).
b. Total flexible-budget variance.
c. Sales volume variance, in terms of operating income.
d. Sales volume variance, in terms of contribution margin.
e. Selling price variance.
EXHIBIT 14. 4 Breakdown of Total Operating Income Variance*SCHMIDT MACHINERY COMPANYAnalysis of Financial ResultsFor October 2019(1)(2)( 3 )(4)(5 )Flexible - BudgetFlexibleSales VolumeMaster ( Static )ActualVariancesBudgetVariancesBudgetUnits780780220U1, 000Sales$6.39. 600$15. 60OF$624, 000$176. 00OU$800, 000Variable costs350.9505OF351. 00099. 00OF450.000Contribution margin$28.8, 650$15 , 65OF$273, 000$ 77. 00OU$350, 000Fixed costs150. 65010. 650U150, 000*O150, 000 "Operating income$128, 000$ 5, 00OF$123, 000$ 17, DOOU$200, 000Analysis of Total Operating - Income Variance*Total operating - income variance*"= $128, 000 -$200, 000 = $72, 000 0Flexible -budget variance*Sales volume variance*= $128,000 - $123, 000= $123.000 - $200, 000= $5, 00OF= $77, 00OU*Budgeted Fixed factory overhead cost = $120.000; budgeted fixed selling and administrative expense = $30.000* Also called the total master ( static ) budget variance .Note : UT denotes an unfavorable effect on operating income ; I denotes a favorable effect on operating income*