EXHIBIT 14.1 Comparison of Actual and Budgeted Operating Income SCHMIDT MACHINERY COMPANY Analysis of Operating Income For October 2019 (1) (2) (3) Actual Operating Income Master (Static) Budget Variances Units Sales Variable costs 780 $639,600 350.950 1,000 220U* 100% $800,000 100% $ 160,400U *** 55 450.000 56 99.050F Contribution margin $288,650 45% $350,000 44% $ 61,350U *** Fixed costs 160.650 25 150.000* 19 10.650U Operating income $128,000 20% $200,000 25% $ 72,000U *U denotes an unfavorable effect on operating income. **F denotes a favorable effect on operating income. ***Actual fixed factory overhead cost = $130,650; actual fixed selling and administrative costs = $30,000. *Budgeted fixed factory overhead cost = $120,000; budgeted fixed selling and administrative costs = $30,000. Required: 1. Prepare a flexible budget for the production and sale of 1,030 units. 2. Compute for October 2019: a. The sales volume variance, in terms of operating income. Indicate whether this variance was favorable (F) or unfavorable (U). b. The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable (F) or unfavorable (U). 3. Compute for October 2019: a. The total flexible-budget (FB) variance. Indicate whether this variance was favorable (F) or unfavorable (U). b. The total variable cost flexible-budget variance. Indicate whether this variance was favorable (F) or unfavorable (U). c. The total fixed cost flexible-budget (FB) variance. Indicate whether this variance was favorable (F) or unfavorable (U). d. The selling price variance. Indicate whether this variance was favorable (F) or unfavorable (U). Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a flexible budget for the production and sale of 1,030 units. Units sold 1,030 Sales Variable expenses Contribution margin 0 Fixed expenses Budgeted operating income $ 0 < Required 1 Required 2 >