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 122,000 liters at a budgeted price of $240 per liter this year. The standard direct cost sheet for one liter of the preservative follows. Direct materials Direct labor (2 pounds @ $15) (0.5 hours $46) $30 23 Variable overhead is applied based on direct labor hours. The variable overhead rate is $130 per direct-labor hour. The fixed overhead rate at the master budget level of activity) is $65 per unit. All non-manufacturing costs are fixed and are budgeted at $2,3 million for the coming year At the end of the year, the costs analyst reported that the sales activity variance for the year was 5732,000 urtavorable The following is the actual income statement in thousands of dollars) for the year The following is the actual income statement (in thousands of dollars) for the year. $28,138 Sales revenue Less variable costs Direct materials Direct labor Variable overhead Total variable costs Contribution margin Less fixed costs Fixed manufacturing overhead Non-manufacturing costs Total fixed costs Operating profil 2,998 1, 120 1.840 55,158 $22,980 1,160 1,340 $2,500 $20,400 Master Budget equired: repare a profit variance analysis (Enter your answers in thousands of dollars. Indicate the effect of each variance by selecting "F" or favorable, or "U" for unfavorable. If there is no effect, do not select either option) PAYNESVILLE CORPORATION Pront Variance Analysis Actual Manufacturing Non Manufacturing Sales Price Flexible Sales Activity Variances Variances Variance Budget Variance Sales revenue 5 28.138 1 LU Materials 2,998 F F Dired labor 1.120 F Variable overhead 1,040 F F Total variable costs S 5,158 F $ 0 Contribution margin 5 22,980 5 0 U Fixed costs Manufacturing 1.100 U Non-manufaduring 1.340 U Total Tood costs 2.500 U Operating profits $ 20,400 u 0 5 5 5