Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company carries no inventories. The master budget calls for the company to manufacture and sell 100,000 liters at a budgeted price of $75 per liter this year. The standard direct cost sheet for one liter of the preservative follows.

Direct materials	(2 pounds @ $4)	$	8
Direct labor	(0.5 hours @ $24)		12

Variable overhead is applied based on direct labor hours. The variable overhead rate is $20 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $10 per unit. All non-manufacturing costs are fixed and are budgeted at $1.2 million for the coming year.

At the end of the year, the costs analyst reported that the sales activity variance for the year was $270,000 unfavorable.

The following is the actual income statement (in thousands of dollars) for the year.

Required:

Prepare a profit variance analysis. (Enter your answers in thousands of dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

PAYNESVILLE CORPORATION
Profit Variance Analysis
	Actual	Manufacturing Variances		Non-Manufacturing Variances		Sales Price Variance		Flexible Budget	Sales Activity Variance		Master Budget
Sales revenue	$7,238
Materials	748
Direct labor	1,010
Variable overhead	930
Total variable costs	$2,688							$0			$0
Contribution margin	$4,550							$0			$0
Fixed costs:
Manufacturing	1,050
Non-manufacturing	1,230
Total fixed costs	$2,280							$0			$0
Operating profits	$2,270							$0			$0