Please help!!
Lexi Belcher picked up the monthly report that Irvin Santamaria left on her desk. She smiled as her eyes went straight to the bottom line of the report and saw the favorable variance for operating income, confirming her decision to push the workers to get those last 340 cases off the production line before the end of the month But as she glanced over the rest of numbers, Lexi couldn't help but wonder if there were errors in some of the line items. She was puzzled at how most of the operating expenses could be higher than the budget since she had worked hard to manage the production line to improve efficiency and reduce costs. Yet the report, shown below, showed a different story Budget 9,910 $1,853,200 Actual Variance 10,250 340 Favorable Cases produced and sold Sales revenue Less variable expenses $1,930,000 $76,800 Favorable Direct material Direct labor Variable manufacturing overhead Variable selling expenses Variable administrative expenses 555,951 265,241 282,447 92,292 41,364 1,237,295 692,705 545,050 257,660 277,480 89,190 39,640 1,209,020 644,180 10,901 Unfavorable 7,581 Unfavorable 4,967 Unfavorable 3,102 Unfavorable 1,724 Unfavorable 28,275 Unfavorable Total variable expense Contribution margin Less fixed expenses 48,525 Favorable 991 Unfavorable Fixed manufacturing overhead Fixed selling expenses Fixed administrative expenses 110,001 68,875 128,632 307,508 $385,197 109,010 69,370 128,830 307,210 $336,970 (495 Favorable) (198 Favorable) Total fixed expense 298 Unfavorable Operating income $48,227 Favorable Lexi picked up the phone and called Irvin. "Irvin, I don't get it. We beat the budgeted operating income for the month, but look at all the unfavorable variances on the operating costs. Can you help me understand what's going on?""Let me look into it and I'll get back to you," Irvin replied Irvin gathered the following additional information about the month's performance .Direct materials purchased: 101,082 pounds at a total of $555,951 .Direct materials used: 101,082 pounds . Direct labor hours worked: 26,262 at a total cost of $265,241 Machine hours used: 40,581
