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 104,000 liters at a budgeted price of $105 per liter this year. The standard direct cost sheet for one liter of the preservative follows.

Direct materials	(2 pounds @ $6)	$	12
Direct labor	(0.5 hours @ $28)		14

Variable overhead is applied based on direct labor hours. The variable overhead rate is $40 per direct-labor hour. The fixed overhead rate (at the master budget level of activity) is $20 per unit. All non-manufacturing costs are fixed and are budgeted at $1.4 million for the coming year.

At the end of the year, the costs analyst reported that the sales activity variance for the year was $354,000 unfavorable.

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

Sales revenue	$	10,498
Less variable costs
Direct materials		1,168
Direct labor		1,030
Variable overhead		950
Total variable costs	$	3,148
Contribution margin	$	7,350
Less fixed costs
Fixed manufacturing overhead		1,070
Non-manufacturing costs		1,250
Total fixed costs	$	2,320
Operating profit	$	5,030

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 Manufacturing Variances Non-Manufacturing Variances Sales Activity Variance Sales Price Flexible Actual Variance Budget Sales revenue 10,498 Materials 1,168 Direct labor 1,030 Variable overhead 950 Total variable costs 3,148 $ 0 Contribution margin Fixed costs: 7,350 $ Manufacturing 1,070 Non-manufacturing 1,250 Total fixed costs 2,320 0 Operating profits 5,030 $ 0 Master Budget 0 0 0 0 EA EA EA EA