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 Direct labor (2 pounds @ $6) (0.5 hours @ $28) $12 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. $10,498 Sales revenue Less variable costs Direct materials Direct labor Variable overhead Total variable costs Contribution margin Less fixed costs Fixed manufacturing overhead Non-manufacturing costs 1,168 1,030 950 $ 3,148 $ 7,350 1,070 1,250 INUI HIIRI +115 Total fixed costs Operating profit $ 2,320 $ 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.) Answer is not complete. PAYNESVILLE CORPORATION Profit Variance Analysis Actual Manufacturing Variances Non-Manufacturing Variances Master Budget Sales revenue $ 2,535 X 5 X Materials Direct labor 10,498 1,168 1,030 950 3,148 7,350 35 X Sales Price Flexible Sales Activity Variance Budget Variance $57,457 X F. $ 466 X $ 6,456 X F X $ 675 X U X 6,457 X 456 X F 7,675 X 4,645 XUX $ 14,807 $ $ 6 X F $ $ 46,334 X UX $ (14,341) $ 6,575 XF XS $ 2,435 XF $ 356 X F $ 463 x U $ 235 XF $23,556 X U X $ 523 x 563 1,972 $ x Variable overhead Total variable costs Contribution margin Fixed costs Manufacturing Non-manufacturing $ $ 355 X U x $ 57,457 X xs 1,070 1,250 8,756 X U 5,747 X F. XX 23,534 X 253 X F 564 X S 355 X U x $ xs 23,534 X Manufacturing Non-manufacturing 57,457 X 564 X 8,756 X U 5,747 XF F X 253 X 1,070 1,250 2,320 5,030 Total fixed costs $ $ 362 X U xs 356 X U x $ 58,021 234 X xs 23,787 XS (21,815) Operating profits $ $25,323 x E >$ 757 XF $67,686 XF > $ (72,362) $ 5,235 XF