Maruti manufactures bots. In 2021, they planned to manufacture 10,000 bots using a standard of .5 direct-labor hours per gnome with a standard materials cost of $1.25 per gnome. Maruti currently leases manufacturing space for $15,000 per year. Each bot sells for $14.

The state passed an ordinance limiting the number of bots to no more than four per acre, which resulted in a decrease in demand for gnomes. Consequently, Maruti only produced and sold 8,500 bots in 2021. He used 4,000 direct-labor hours and materials cost $11,000. The actual average hourly rate of $6.40 during 2021 was $.25 higher than the standard wage rate of $6.15.

Calculate variance analysis to decompose the difference between the originally budgeted profit and the actual level of profit. Show what amount of the difference is due to each of the following and label each variance as favorable or unfavorable

1. operating at a lower level of activity than planned, i.e., selling only 8,500 bots rather than 10,000
2. difference between the actual labor wage rate and the standard labor wage rate at the achieved level of production
3. difference between actual labor hours and the standard hours at the achieved level of production
4. difference between actual material expenditures and the original budgeted materials expenditures to produce 10,000 bots