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Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company cames no inventories. The master budget calls for the

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Paynesville Corporation manufactures and sells a preservative used in food and drug manufacturing. The company cames 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 Direct labor (2 pounds 54) 56 (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.

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