I am unsure on how to do the last part - how is this done ?

Problem 6-30 Lexi Belcher picked up the monthly report that Irvin Santamaria left on her desk. She smiled as her eyes went straight to the bottom line of the report and saw the favorable variance for operating income, confirming her decision to push the workers to get those last 260 cases off the production line before the end of the month. But as she glanced over the rest of numbers, Lexi couldn't help but wonder if there were errors in some of the line items. She was puzzled at how most of the operating expenses could be higher than the budget since she had worked hard to manage the production line to improve efficiency and reduce costs. Yet the report, shown below, showed a different story. Actual Budget 9,990 $1,868,100 Variance Cases produced and sold Sales revenue Less variable expenses 10,250 260 Favorable S1,945,600 $77,500 Favorable Direct material Direct labor Variable manufacturing overhead Variable selling expenses Variable administrative expenses 560,439 267,382 284,727 93,037 41,698 1,247,283 698,317 10,989 Unfavorable 7,642 Unfavorable 5,007 Unfavorable 3,127 Unfavorable 1,738 Unfavorable 28,503 Unfavorable 549,450 259,740 279,720 Total variable expense Contribution margin Less fixed expenses 39,960 1,218,780 649,320 48,997 Favorable 110,889 69,431 129,670 309,990 $388,327 109,890 69,930 129,870 309,690 $339,630 999 Unfavorable (499 Favorable) (200 Favorable) 300 Unfavorable ring Fixed selling expenses Fixed administrative expenses Total fixed expense Operating income $48,697 Favorable Lexi picked up the phone and called Irvin-Irvin, I don't get it. We beat the budgeted operating income for the month, but look at all the unfavorable variances on the operating costs. Can you help me understand what's going on?" "Let me look into it and I'll get back to you," Irvin replied Irvin gathered the following additional information about the month 's performance . Direct materials purchased: 101,898 pounds at a total of $560,439 . Direct materials used: 101,898 pounds . Direct labor hours worked: 26,474 at a total cost of $267,382 Machine hours used: 40,909 Irvin also found the standard cost card for a case of product. Standard Cost Direct materials Direct labor Variable overhead Fixed overhead Total standard cost per case Standard Price $5.50 per pound $10 per DLH $7 per MH $2.75 per MH Standard Quantity 10 pounds 2.60 DLH 4 MH 4 MH $55 26.00 28.00 11.00 $120.00