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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

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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 122,000 liters at a budgeted price of $240 per liter this year. The standard direct cost sheet for one liter of the preservative follows. $30 Direct materials Direct labor (2 pounds $15) (0.5 hours $46) Variable overhead is applied based on direct labor hours. The variable overhead rate is $130 per direct-labor hout. The fixed overhead rate (at the master budget level of activity is $65 per unit. All non-manufacturing costs are fixed and are budgeted at $2.3 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $732,000 unfavorable. The following is the actual income statement (in thousands of dollars) for the $28,138 2,998 sales revenue Less variable costs Direct materials Direct labor Variable overhead Total variable costs Contribution margin Less fixed costs Fixed manufacturing overhead Non- facturing costs Total fixed costs Operating profit $ 5,150 $22.980 1,160 $2.500 $20,480 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 $ 1 + Sales revenue Materials Direct labor Variable overhead Totul variables Contribution margin Fedo a cturing Non-mantang To fixed costs Operating profits 28,138 2,9001 201 1,040 5.15 22,901 $ $ 110 $ S 25001 20 480

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