Question 6-30 Part H

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 320 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 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 Actual Budget Variance Cases produced and sold 10,250 9,930 320 Favorable Sales revenue $1,933,900 $1,856,900 $77,000 Favorable Direct material 557,073 10,923 Unfavorable 546,150 265,776 Direct labor 258, 180 7,596 Unfavorable Variable manufacturing overhead 283,017 278,040 4,977 Unfavorable Variable selling expenses 3,108 Unfavorable 92,478 89,370 Variable administrative expenses 39,720 1,728 Unfavorable 41,448 48,668 Favorable Contribution margin 694,108 645,440 Fixed manufacturing overhead 110,223 109,230 993 Unfavorable 496 Favorable Fixed selling expenses 69,014 69,510 Fixed administrative expenses 129,090 199 Favorable 128,891 $385,980 $337,610 $48,370 Favorable Operating in com