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- Required information [The following information applies to the questions displayed below.] As part of its comprehensive planning and control system, Mopar Company uses a master budget and subsequent variance analysis. You are given the following information that pertains to the company's only product, XL-10, for the month Part 1 of 4 of December. Required: 1. Using text Exhibit 14.4 as a guide, complete the missing parts of the following profit report for December. 2. Based on your completed profit report, determine the dollar amount, and label (Favorable or Unfavorable) each of the following variances for December: a. Total master (static) budget variance (also referred to as the total operating income variance for the period). b. Total flexible-budget variance. c. Sales volume variance, in terms of operating income. d. Sales volume variance, in terms of contribution margin. e. Selling price variance.EXHIBIT 14.4 Breakdown of Total Operating Income Variance SCHMIDT MACHINERY COMPANY Analysis of Financial Results For October 2019 (1) (2) (3) (4) (5) Flexible-Budget Flexible Sales Volume Master (Static) Actual Variances Budget Variances Budget Units 780 780 220U 1,000 Sales $639,600 $15,60OF $624,000 $176,00OU $800,000 Variable costs 350,950 50F 351,000 99,00OF 450,000 Contribution margin $288,650 $15,650F $273,000 $ 77,000U $350,000 Fixed costs 160,650 10,650U 150,000* 150,000 Operating income $128,000 $ 5,00OF $123,000 $ 77,00OU $200,000 Analysis of Total Operating-Income Variance Total operating-income variance"* =$128,000-$200,000=$72,000U Flexible-budget variance Sales volume variance =$128,000 - $123,000 =$123,000 - $200,000 =$5,000F =$77,000U *Budgeted fixed factory overhead cost = $120,000; budgeted fixed selling and administrative expense = $30,000. "Also called the total master (static) budget variance. Note: U denotes an unfavorable effect on operating income; F denotes a favorable effect on operating income.Complete this question by entering your answers in the tabs below. Required 1 Required 2 Using text Exhibit 14.4 as a guide, complete the missing parts of the following profit report for December. (If a variance has no amount, select "None" in the corresponding dropdown cell.) Actual results Flexible-budget variances Flexible budget Sales volume variances Master (static) budget Unit sales 117,000 105,000 Sales 585,000 525,000 Variable costs 444,600 315,000 Contribution margin $ 140,400 $ 210,000 Fixed costs 79,000 92,000 Operating income $ 61,400 69 118,000 Required] Required2 2. Based on your completed prot report, determine the dollar amount, and label {Favorable or Unfavorablejj each of the following variances for December: (If a variance has no amount, select "None" in the corresponding dropdown cell.) a. Total master (static) budget valianoe (also referred to as the total operating income variance for the period). b. Total exible-budget variance. c. Sales volume variance, in terms of operating income. :1. Sales volume variance, in terms of contribution margin. e. Selling price valiance. Show less' E Total master {static} budget valiance _ _ Total flexible- budget variance Sales volume variance, in terms of operating income Sales volume variance, in terms of contribution margin Selling price valiance 3. Explain what is meant by the labels "favorable" and "unfavorable" in terms of a profit-variance report of the type you just prepared for the Mopar Company.4. What information is contained in the total flexiblebudget variance for the period? Include in your answer a short discussion of the component variances that can be calculated to explain the causes of the total exiblebudget variance. 5. Some individuals have recently criticized the use of standard costs and flexible budgets to perform the kinds of variance analyses covered in this chapter Provide an overview of the arguments for and against the use ofstandard costs and flexible budgets for operational control purposes