Featured Exercises 1. Vermillion Companys actual results and static budget for last month are as follows: Actual Results Static Budget Units sold 12,000 10,000 Revenues $119,200 $100,000 Variable costs 68,800 60,000 Contribution margin 50,400 40,000 Fixed costs 34,000 30,000 Operating income $ 16,400 $ 10,000 a. Compute the flexible-budget operating income. b. Compute the static-budget variance for operating income and indicate whether it is favorable or unfavorable. c. Compute the flexible-budget variance for operating income and indicate whether it is favorable or unfavorable. d. Compute the sales-volume variance for operating income and indicate whether it is favorable or unfavorable. e. Compute the selling-price variance and indicate whether it is favorable or unfavorable. f. Without using any of the variances computed in (b) through (e), present computations to explain why actual operating income exceeds static-budget operating income by $6,400. 2. Randall Companys data for direct manufacturing labor for last month are as follows: Actual hours worked 20,000 Standard hours allowed for actual output 21,000 Price variance unfavorable $3,000 Payroll liability $126,000 Compute the efficiency variance for direct manufacturing labor.