Problem 6-30 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 Variance 340 Favorable Ceses produced end sold Sales revenue Less variable expenses 10,250 $1,930,000 $76,800 Favorable Direct material Direct labor ariable manufacturing overhead Variable selling expenses Variable adm nistrative expenses 545,050 257,560 277,480 10,901 Unfavorable 7,581 Unfavorable 4,967 Unfavorable 3,102 Unfavorable 255,241 282,447 Total variable expense Contribution margin Less fixed expenses 1,237,295 28,275 Unfavorable 644,180 48,525 Favorable Fixed manufacturing overhead Fixed selling expenses Fixed adminstrative expenses 110,001 68,875 69,370 128,830 307,210 991 Unfavorable (495 Favorable) (198 Favorable) Total fixed expense Operating income 298 Unfavorable $335,197 $48,227 Favorable Lexi picked up the phone and called Irvin. Irvin, 1 don't get it. We beat the budgeted operoting 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 lcok into it and 1 back to you," Irvin replied. get 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 Irvin also found the standard cost card for a case of product Standard Cost Direct materials Direct labor Variable overhead Fixed overhead Total standard cost per case Standard Price $S.50 per pound $10 per DLH $7 per MH $2.73 per MH Standard Quantity 10 pounds 2.58 DLH 4 MH 4 MH 25.80 28.00 10.92 119.72