Comparison of Actual and Budgeted Operating Income (3) Variances Units 220 U SCHMIDT MACHINERY COMPANY Analysis of Operating Income For October 2022 (1) (2) Actual Operating Income Master Budget 780 1,000 $639,600 100% $ 800,000 100% 350,950 55 450,000 56 $ 288,650 45% $ 350,000 44% 160,650* 25 150,000+ 19 $ 128,000 20% $ 200,000 25% Sales Variable costs $ 160,400 U 99,050 F** $ 61,350 U 10,650 U Contribution margin Fixed costs ***** Operating income $ 72,000 U *U denotes an unfavorable effect on operating income. **F denotes a favorable effect on operating income. ***Actual fixed factory overhead cost = $130,650; actual fixed selling and administrative costs = $30,000. fBudgeted fixed factory overhead cost = $120,000; budgeted fixed selling and administrative costs = $30,000. Assume that in October 2022 the Schmidt Machinery Company (Exhibit 14.1) manufactured and sold 1,040 units for $715 each. During this month, the company incurred $457,600 total variable costs and $180,600 total fixed costs. The master budget data for the month are as given in Exhibit 14.1. Required: 1. Prepare a flexible budget for the production and sale of 1,040 units. 2. Compute for October 2022: a. The sales volume variance, in terms of operating income. Indicate whether this variance was favorable or unfavorable. b. The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable or unfavorable. 3. Compute for October 2022: a. The total flexible budget variance. Indicate whether this variance was favorable or unfavorable. b. The total variable cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. C. The total fixed cost flexible budget variance. Indicate whether this variance was favorable or unfavorable. d. The selling price variance. Indicate whether this variance was favorable or unfavorable