Comparison of Actual and Budgeted Operating Income Assume that in October 2022 the Schmidt Machinery Company (Exhibit 14.1) manufactured and sold 1,100 units for $853 each. During this month, the company incurred $550,000 total variable costs and $181,800 total fixed costs. The master budget data for the month are as given in Exhibit 14.1. SCHMIDT MACHINERY COMPANY Analysis of Operating Income For October 2022 (1) (2) Actual Operating Income Master Budget 780 1,000 (3) Variances Required: 1. Prepare a flexible budget for the production and sale of 1,100 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. Units 220 U* Sales 100% 100% $ 639,600 350,950 ** Variable costs 55 56 Complete this question by entering your answers in the tabs below. Contribution margin $ 288,650 45% $ 800,000 450,000 $ 350,000 150,000* $ 200,000 44% $ 160,400 U 99,050 F $ 61,350 U 10,650 U $ 72,000 U *** Fixed costs 25 19 Required 1 Required 2 Required 3 160,650 $ 128,000 Operating income 20% 25% Prepare a flexible budget for the production and sale of 1,100 units. *U denotes an unfavorable effect on operating income. Units sold **F denotes a favorable effect on operating income. Sales Variable costs ***Actual fixed factory overhead cost = $130,650; actual fixed selling and administrative costs = $30,000. = Contribution margin $ 0 Fixed costs #Budgeted fixed factory overhead cost = $120,000; budgeted fixed selling and administrative costs = $30,000. = Budgeted operating income $ 0