Steve park, president and principal stockholder of Pelican Instruments Inc.

TABLE 2 Additional Information Electric Electronic Meters Instruments (EM) (EI) Selling prices per unit: Average standard price $40.00 $180.00 Average actual prices, 2017 30.00 206.0 0 Variable product costs per unit: Average standard manufacturing cost $20.00 $50.00 Average actual manufacturing cost 21.00 54.00 Volume information: Units produced and sold-actual 141,770 62,172 Units produced and sold-planned 124,800 66,000 Total industry sales, 2017-actual $44 million $76 million Total industry variable product costs, 2017-actual $16 million $32 million United's share of the market (% of physical units): Planned 10% 15% Actual 16 / 9% Planned Actual Firm-wide fixed expenses (1,000s) Fixed manufacturing expenses $3,872 $3,530Steve Park, president and principal stockholder of Pelican Instruments, Inc., sat at his desk reflecting on the 2017 results (Table 1). For the second year in succession, the company had exceeded the profit budget. Steve Park was obviously very happy with the 2017 results. All the same, he wanted to get a better feel for the relative contributions of the R&D, manufacturing, and marketing departments in this overall success. With this in mind, he called his assistant, a recent graduate of a well-known business school, into his office. "Amy," he began, "as you can see from our recent financial results, we have exceeded our profit targets by $622,000. Can you prepare an analysis showing how much R&D, manufacturing, and marketing contributed to this overall favorable profit variance?) TABLE 1 Pelican Instruments, Inc. - Income Statement for the Year 2017 Budget Actual Sales $16,872 $17,061 Cost of Goods Sold $ 9,668 $ 9,865 Gross Margin $ 7,204 $ 7, 196 Less: Other Operating Expenses Marketing $1,856 $1,440 R&D $1,480 $ 932 Administration $1,340 $ 4,676 $1,674 $ 4,046 Profit before Taxes $ 2,528 $ 3,150Fixed marketing expenses 1,856 1,440 Fixed administrative expenses 1,340 1,674 Fixed R&D 1,480 932 expenses (exclusiv ely for electronic instruments) Amy Shultz, with all the fervor of a recent convert to professional management, set to her task immediately. She collected the data in Table 2 and was wondering what her next step should be. United Instruments' products can be grouped into two main lines of business: electric meters (EM) and electronic instruments (ED). Both EM and El are industrial measuring instruments and perform similar functions. However, these products differ in their manufacturing technology and their end-use characteristics. EM is based on mechanical and electrical technology, whereas El is based on microchip technology. EM and El are substitute products in the same sense that a mechanical watch and a digital watch are substitutes. Pelican Instruments uses a variable costing system for internal reporting purposes