Question 1:

Patty, Inc. wishes to evaluate, in summary fashion, its financial performance for the most recent period. Budgeted and actual operating results for this period are presented below.

	Master Budget			Actual Results
Units sold		40,000			36,000
Sales	$	2,000,000		$	1,900,000
Variable costs	$	1,200,000		$	1,152,000
Fixed costs	$	600,000		$	660,000

Calculate (to the nearest dollar): Indicate favorable / unfavorable variances and the meaning of the variance:

1. What is the flexible-budget operating income for the period?

2. What is the total operating-income variance of the period?

3. What is the sales-volume variance, in terms of operating income, for the period?

4. What is the flexible budget variance, in terms of operating income, for the period?

Please explain and show work. Will rate.