Exercise 16-35 (Algo) Profit Variance Analysis (LO 16-4) Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the company to manufacture and sell 114.000 liters at a budgeted price of $180 per liter this year. The standard direct cost sheet for one liter of the preservative follows. Direct materials Direct labor (2 pounds $11) (0.5 hours $22 19 Variable overhead is applied based on direct labor hours. The variable overhead rate is $90 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $45 per unit. All non-manufacturing costs are fixed and are budgeted at $1.9 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $584,000 unfavorable. The following is the actual income statement (in thousands of dollars) for the year. Sales revenue $19, 698 Less variable costs Direct materials 2,158 Direct labor 1,080 Variable overhead 1,000 Total variable costs Contribution margin $15, 460 Less fixed costs Fixed manufacturing overhead 1, 120 Non-manufacturing costs 1,300 Total fixed costs $ 2, 420 Operating profit $13,040 BA price rays (Timber your aldellan. Indicate the effect of characely wale for foreale, formaverable. If there welfact, de net select theregtion)