Check It Off Printers, Inc., produces luxury checkbooks with three checks and stubs per page. Each checkbook is designed for an individual customer and is ordered through the customer's bank. The company's operating budget for September 2020 included these data:

The executive vice president of the company observed that the operating income for September was much lower than anticipated, despite a higher-than-budgeted selling price and a lower-than-budgeted variable cost per unit. As the company's management accountant, you have been asked to provide explanations for the disappointing September results.

Check It Off

develops its flexible budget on the basis of budgeted per-output-unit revenue and per-output-unit variable costs without detailed analysis of budgeted inputs.

The budgeted amounts for September 2020 were:

Number of checkbooks16,000Selling price per book$23Variable cost per book$6Fixed costs for the month$125,000

The actual results for September 2020 were as follows:

Number of checkbooks produced and sold13,400Average selling price per book$25Variable cost per book$5Fixed costs for the month$130,400