At the end of the quarter the budget and the actual results are compared. Usually the variances between the projected budget and the actual results are negligible. However, this quarter the results are drastically different from the budget. Projections estimated $22,500 in gross profit, but actual gross profit shows a loss of $23,090. The general manager, who leads the profit center, received a variance report from production, but that didn't explain the entire difference. Having no confidence in his controller, the general manager brought in the internal audit team from Global Corporation. As the internal audit team, the first report required should use variances to explain tlie entire difference in gross profit and interpret those variances to initiate further investigation or corrective action. Detailed information about production and sales is as follows: Actual Budget Production Volume (units) 11,000 units 11,000 units Sales Volume (units) 10,000 units 11,000 units Sales Price per unit $45.00 $45.00 Direct labor hours 5,510 hours 5,500 hours Direct labor cost $55,259 $55,000 Raw Materials purchased (lbs) 120,000 lbs 110,000 lbs Raw Materials purchased ($) $384,000 $330,000 Raw Materials used (lbs) 115,500 lbs 110,000 lbs Overhead Costs ($) $54,050 $82,500