(Variance analysis and report; IMA case adapted) Henry Pacer is the general manager for the Ace Chemicals Division. Following is his division's Income Statement for the month just completed.

Henry knew before receiving the statement that sales were above budget for the month and that the effect of recent price increases on most products would be realized this month. As you would expect, he was very upset upon finding his income results were below budget, while his sales were more than 10% above budget. He has asked the accounting department for an immediate explanation. The accounting department has looked at its detailed budget and found the following data:

Start-up and obsolescence charges were budgeted for $1 10M per month. Included in the budget for November were the following unfavorable volume variances:

Following is a Gross Profit Report for the division for the month of November.

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Thousands of $'s Actual Budget Sales 14,005 12,600 Cost of Goods Sold (COGS) 11,605 9,960 Gross Profit. 2,400 2,640 Other Expense 705 640 Operating Income 1,695 2,000 Other Income 105 200 Pre-Tax Income 1,800 2,200 Income Taxes Net Income 900 1,100 900 1.100