EXHIBIT 14.4 Breakdown of Total Operating Income Variance SCHMIDT MACHINERY COMPANY Analysis of Financial Results For October 2019 (2) (3) Flexible-Budget Flexible Variances Budget (1) (4) Sales Volume Variances (5) Master (Static) Budget Actual Units 780 780 2200 1,000 Sales Variable costs Contribution margin Fixed costs Operating income $639,600 350,950 $288,650 160,650 $128,000 $15,600F 50F $15,650F 10,6500 $5,000F $624,000 351,000 $273.000 150,000 $123,000 $176,000U 99,000F $ 77,0000 0 $ 77,0000 $800,000 450,000 $350,000 150,000 $200,000 Analysis of Total Operating-Income Variance Total operating-income variance" =$128,000-$200,000=$72,000U Flexible-budget variance = $128,000 - $123,000 =$5,000F Sales volume variance =$123,000 - $200,000 =$77,000U *Budgeted fixed factory overhead cost = $120,000; budgeted fixed selling and administrative expense = $30,000 **Also called the total master (static) budget variance. Note: U denotes an unfavorable effect on operating income; F denotes a favorable effect on operating income. Required: 1. Using text Exhibit 14.4 as a guide, complete the missing parts of the following profit report for December. 2. Based on your completed profit report, determine the dollar amount, and label (Favorable or Unfavorable) each of the following variances for December: a. Total master (static) budget variance (also referred to as the total operating income variance for the period). b. Total flexible-budget variance. c. Sales volume variance, in terms of operating income. d. Sales volume variance, in terms of contribution margin. e. Selling price variance. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Using text Exhibit 14.4 as a guide, complete the missing parts of the following profit report for December. (If a variance has no amount, select "None" in the corresponding dropdown cell.) Master (static) budget Unit sales Sales Flexible Sales volume variances budget 111,000 13,000 Favorable $ 555,000 $ 65,000 Favorable Actual results Flexible-budget variances 111,000 O None $ 555,000 $ 421,800 $ 133,200 75,000 0 None $ 98,000 490,000 294,000 Variable costs $ 196,000 Contribution margin Fixed costs Operating income 86,000 110,000 $ 58,200 $ Required 1 Required 2 2. Based on your completed profit report, determine the dollar amount, and label (Favorable or Unfavorable)) each of the following variances for December: (If a variance has no amount, select "None" in the corresponding dropdown cell.) a. Total master (static) budget variance (also referred to as the total operating income variance for the period). b. Total flexible-budget variance. c. Sales volume variance, in terms of operating income. d. Sales volume variance, in terms of contribution margin. e. Selling price variance. Show less a. C. Total master (static) budget variance b. Total flexible-budget variance Sales volume variance, in terms of operating income d. Sales volume variance, in terms of contribution margin Selling price variance e
