LawnMate Company manufactures power movers that are sold throughout the United States and Canada. The company uses a comprehensive budgeting process and compares actual results to budgeted amounts on amonthly basis. Each month, LawnMate's accounting department prepares a variance analysis and distributesthe report to all responsible parties. Cheng Li, production manager, is upset about the results for May. Cheng, who is responsible for the cost of goods manufactured, has implemented several cost-cutting measures n the manufacturing area and is discouraged by the unfavorable variance in variable costs.

LAWNMATE COMPANY Operation Results For the month of May In USDollars Master Budget Units Sold 5,000 Revenue 1,200,000 Variable Cost 760,000 Contribution Margin 440,000 Fixed Overhead 180,000 Fixed General and administrative Cost 140,000 Operating Income 120,000 Actual 4,800 1, 152,000 780,000 372,000 180,000 135,000 57,000 Variance 200 48,000 20,000 68,000 5,000 63,000