Brodrick Company expects to produce 21,900 units for the year ending December 31. A flexible budget for 21,900 units of production reflects sales of $569,400; variable costs of $65,700; and fixed costs of $143,000.

1. If the company instead expects to produce and sell 27,100 units for the year, calculate the expected level of income from operations.

2. Assume that actual sales for the year are $656,600 (27,100 units), actual variable costs for the year are $113,800, and actual fixed costs for the year are $132,000. Prepare a flexible budget performance report for the year. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.)