Dougs Diner is planning to expand operations and is concerned that its reporting system might need improvement. The master budget income statement for the Downtown Dougs, which contains a delicatessen and restaurant operation, follows (in thousands).

	Delicatessen						Restaurant						Total
Sales revenue		$	700					$	2,000				$	2,700
Costs
Purchases			385						1,100					1,485
Hourly wages			35						439					474
Franchise fee			21						37					58
Advertising			50						100					150
Utilities			49						63					112
Depreciation			25						38					63
Lease cost			15						25					40
Salaries			15						25					40
Total costs		$	595					$	1,827				$	2,422
Operating profit		$	105					$	173				$	278

The company uses the following performance report for management evaluation.

	DOWNTOWN DOUGS
	Net Income for the Year
	($000)
	Actual Results
Actual Results	Delicatessen						Restaurant				Total				Budget				Over- or (Under-) Budgeta
Sales revenue		$	800				$	1,000			$	1,800			$	2,700				$	(900	)
Costs
Purchasesb			470					400				870				1,485				$	(615	)
Hourly wagesb			40					350				390				474					(84	)
Franchise feeb			24					30				54				58					(4	)
Advertising			50					100				150				150
Utilitiesb			52					50				102				112					(10	)
Depreciation			25					38				63				63
Lease cost			15					25				40				40
Salaries			15					25				40				40
Total costs		$	691				$	1,018			$	1,709			$	2,422				$	(713	)
Operating profit		$	109				$	(18	)		$	91			$	278				$	(187	)

^a There is no sales price variance.

^b Variable costs; all other costs are fixed.

Required:

Prepare a profit variance analysis for the delicatessen segment. (Hint: Use sales revenue as your measure of volume.)

Actual Purchases Variances Marketing & Administrative Variances Flexible Budget Activity Variance Master Budget S 300 $ 700 470 385 35 21 40 24 52 586 S Sales revenue Variable costs: Purchases Hourly wages Franchise fee Utilities Total variable costs Contribution margin Fixed costs: Advertising Depreciation Lease Salaries Total fixed costs Operating profit S S 49 490 210 214 S 50 25 50 25 15 15 15 15 105 S 105 S S 109 S 105