Play Time Toys is organised into two major divisions: marketing and production. The production division is further divided into three departments: puzzles, dolls and video games. Each production department has its own manager.

The entity's management believes that all costs must be covered by sales of the three product lines. Therefore, a portion of headquarters, marketing, and the production division costs are allocated to each product line.

The entity's accountant prepared the following performance report for the manager of the dolls production department.

Performance report dolls production department (Volumes and total dollar amounts are in thousands) Forecast Sales volume 1,000 units Revenue $12.00/unit Direct material $2.00/unit Direct labour $1.00/unit Variable factory overhead $1.00/unit Fixed factory overhead $0.80/unit Production division overhead $0.10/unit Headquarters $0.20/unit Marketing $0.50/unit Operating income $6.40/unit Budget 1,000 $12,000 $2,000 $1,000 $1,000 $800 $100 $200 $500 $6,400 Actual Variance 1300 $11400 $2300 $1225 $m100 $1,020 $105 $220 $550 $6,080 100 F $400 F -$100 U -$225 U -$100 U -$220 U -$5 U -$20 U -$50 U -$320 U