Sales-volume variance, production-volume variance. Morano Company prepared its budgeted output and sales at its maximum capacity of 20,000 units for 2007. However, due to efficiency improvements, Morano was able to sell 22,000 units for the year. Other data for 2007 follow:

Budgeted fixed overhead costs $600,000 Budgeted selling price $ 120 Required Budgeted variable cost per unit GO 1. Calculate the budgeted profit per unit, the operating income based on the budgeted profit per unit, the flexible-budget operating income, and the static-budget operating income.

2. Compute sales-volume variance and production-volume variance. What do each of these variances measure?