Sunland, Inc. produces and sells lumbar support cushions for office chairs using a special foam that molds to a person's back. Since all products are made to order, the only inventory the company maintains is raw materials. Thus, all costs of production are recognized in the period in which they are incurred. The following annual performance report was prepared from the company's accounting records: Actual Budget Variance Units sold 14,800 15,000 200 U Sales revenue $3,182,000 $3,150,000 $32,000 F Cost of goods sold 2,064,830 2,075,000 (10,170) F Gross margin 1,117,170 1,075,000 42,170 F Selling and administrative expenses 288,625 290,000 (1,375) F Operating income $828,545 $785,000 $43,545 F The following fixed costs are included in these amounts. Actual Budget Cost of goods sold $195,000 $200,000 Selling and administrative expenses 140,000 140,000 Hank Martinez, Sunland' CFO, used the following standard cost card in preparing the budget and thought he had done a good job estimating production and sales. He wonders why the variable cost of goods sold deviated from that budget. Standard Quantity Total Cost per Unit Standard Price per Unit Direct material 5 yards $10 per yard $50 Direct labor 2.5 hours $16 per DLH 40 Variable overhead 2.5 hours $14 per DLH 35 $125 Actual variable costs incurred during the year were as follows. Direct materials purchased and used (78,400 yards @ $9.80) $768,320 Direct labor cost incurred (37,240 DLH @ $15.50) 577,220 Variable overhead costs incurred 524,290 $1,869,830 Prepare a performance report that isolates Sunland' flexible budget and sales volume variances. (Round answers to O decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter O for the amounts. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Actual Results Flexible Budget Variance Unit sales 14800 0 i Not Applicable Sales revenue $ 3182000 $ Less Variable expenses Cost of goods sold Selling and administrative DIO! MOON Total variable expenses Contribution margin Less V Fixed expenses Sales revenue $ 3182000 $ Less Variable expenses Cost of goods sold Selling and administrative ULILINU Total variable expenses Contribution margin Less Fixed expenses Cost of goods sold Selling and administrative bono Total fixed expenses Operating income $ $ Flexible Budget Sales Volume Variance Static Budget 14800 200 Unfavorable 150 $ $ $ $ 31500 Paino DIO 10 DITO DO!! THAN PO LUDI DIO DOO, QUI MOLO MU HD Con i $ $ $ e Textbook and Media