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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 780 1,000 220U* Sales $639,600 100% $800,000 100% $ 160,40OU Variable costs 350.950 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.Assume that in October 2019 the Schmidt Machinery Company {Exhibit 14.1: manufactured and sold 980 units for $750 each. During this month, the company incurred $529,200 total variable costs and $181,300 total fixed costs. The master (static) budget data for the month are as given in Exhibit 14.1. Required: 1. Prepare a flexible budget for the production and sale of 980 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 (U1. 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 flexiblebudget [FBi variance. Indicate whether this variance was favorable {F} or unfavorable (U). b. The total variable cost flexiblebudget variance. Indicate whether this variance was favorable (F) or unfavorable (U). c. The total xed cost flexiblebudget {PEI} 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 [lm below. Required 1 Required 2 Required 3