Acme Company's production budget for August is 18,900 units and includes the following component unit costs: direct materials, $7.2; direct labor, $11.4; variable overhead, $5.4. Budgeted fixed overhead is $46,000. Actual production in August was 21,840 units. Actual unit component costs incurred during August include direct materials, $9.60; direct labor, $10.80; variable overhead, $6.20. Actual fixed overhead was $48,900. The standard fixed overhead application rate per unit consists of $2.2 per machine hour and each unit is allowed a standard of 1 hour of machine time. Required: Calculate the fixed overhead budget variance and the fixed overhead volume variance. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Fixed overhead budget variance Fixed overhead volume variance The president of Ravens Inc. attended a seminar about the contribution margin model and returned to her company full of enthusiasm about it. She requested that last year's traditional model income statement be revised, and she received the following report: Total Company Sales Variable expenses $520,000 Contribution margin Fixed expenses 280,000 $240,000 190,000 Net income (loss) $ 50,000 $200,000 114,000 $ 86,000 60,000 $ 26,000 Division B $140,000 70,000 $ 70,000 74,000 $ (4,000) C $180,000 96,000 $ 84,000 56,000 $ 28,000 The president was told that the fixed expenses of $190,000 included $103,500 that had been split evenly between divisions because they were general corporate expenses. After looking at the statement, the president exclaimed, "I knew it! Division B is a drag on the whole company. Close it down!" Required: a. Evaluate the president's remark. The president's remark ignores the misleading result of arbitrarily allocated fixed expenses. The president's remark ignores the misleading result of arbitrarily allocated variable expenses. b. Calculate what the company's net income would be if Division B were closed down. Net income without Division B c. What is the policy statement related to the allocation of fixed expenses. Never arbitrarily allocate fixed expenses. Never arbitrarily allocate variable expenses