Doug's Diner is planning to expand operations and is concerned that its reporting system might need improvement. The master budget income statement for the Downtown Doug's, which contains a delicatessen and restaurant operation, follows (in thousands). Delicatessen $1,000 Restaurant $2,500 Total $3,500 Sales revenue Costs Purchases Hourly wages Franchise fee Advertising Utilition Depreciation Tease cont Salaries Total coats Operating profit 600 50 30 100 70 SO 30 30 960 40 1.000 876 76 200 126 76 50 50 $2,454 $ 46 1,600 926 106 300 196 126 80 80 $3,414 $ 86 $ $ The company uses the following performance report for management evaluation DOWNTOWN DOUG'S Net Income for the Year (5000) Actual Results Over or (Under-) The company uses the following performance report for management evaluation. DOWNTOWN DOUG'S Net Income for the Year ($000) Actual Results Over- or (Under-) Budget $ (300) Delicatessen $1,200 Restaurant $2,000 Total $3,200 Budget $3,500 780 1,600 926 $ (20) (166) (10) 60 Actual Results Sales revenue Costs Purchases Hourly wages Franchise teeb Advertising Utilities Depreciation Lease cost Salaries Total costs Operating profit 800 700 60 200 100 1,580 760 96 300 176 126 80 80 $3,198 $ 2 (20) 36 100 76 50 30 30 $1,162 $ 38 76 106 300 196 126 80 80 $3,414 86 50 50 $2,036 $ (36) $ (216) $ (84) a There is no sales price variance. Variable costs; all other costs are fixed. Actual Purchases Variances Marketing & Administrative Variances Flexiblo Budget Activity Variance Master Budget $ 1,200 $ 1,000 600 Sales revenue Variable costs: Purchases Hourly wages Franchise fee Utilities 780 60 36 76 50 30 70 750 250 952 $ $ $ 248 $ 100 Total variable costs Contribution margin Fixed costs: Advertising Depreciation Lease Salaries Total fixed costs Operating profit 100 50 60 30 30 30 $ $ 30 210 38 $ $ 210 40