John Richardson is the manufacturing production supervisor for Zachary Tool Works, a company that manufactures hand tools for mechanics. Trying to explain why he did not get the year-end bonus that he had expected, he told his wife. This is the dumbest place I've ever worked. Last year the company set up this budget assuming it would sell 253,800 units. Well, it sold only 243,800. The company fost money and gave me a bonus for not using as much materials and labor as was called for in the budget. This year, the company has the same 253,800 units goal and it sells 263,800. The company's making all kinds of money. You'd think I'd get this big fat bonus. Instead, management tells me I used more materials and labor than was budgeted. They said the company would have made a lot more money frd stayed within my budget. I guess I gotta wait for another bad year before I get a bonus. Like I said, this is the dumbest place I've ever worked." Zachary's master budget and the actual results for the most recent year of operating activity follow. Master Budget 253,300 3507.000 Actual Resulta 263.100 S 9.062,520 Variances TOU 10.000 5 255,520 Number of units Sales revenue Variable manufacturing costs Materials Labor Overhead Variable selling, general and administrative coats Contribution margin Tixed costs Manufacturing overhead Selling general and administrative coats Net Income (602.120 250 (40.6303 (482.220) 2,055.780 (631,320 (325,750) (359.830) 503.2203 2.237.500 22.000 1.500 17:200 000 1012820 (1.294,186 1427, 146 5 284,256 12.292,10) 462,401 497.37 2.000 9,300 $ 193,120 Required c. Prepare a flexible budget and recompute the budget varlancos (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect tie zero variancel Required c. Prepare a flexible budget and recompute the budget variances, (Indicate the effect of each variance by selecting "F" for fa "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Flexible Budget Variances Actual Results 263,800 $ 4,062,520 Number of Units Sales revenue Variable manufacturing costs Materials Labor Overhead Variable Selling, general administrative Contribution margin Foxed costs Manufacturng overhead Selling general & administrative Not income (631.120) (325450) (359,830) (508,220) 2.237,600 (1.292,380) (467.844) 477 376