The following information is available for Brownstone Products Company for the month of July:

Actual Master Budget

Units 3,900 4,000

Sales revenue $ 60,200 $ 60,000

Variable manufacturing costs 20,000 16,000

Fixed manufacturing costs 14,900 13,900

Variable selling and administrative expenses 8,700 8,000

Fixed selling and administrative expenses 10,100 10,000

1. What was the total operating income variance for July? (Note: this variance is also called the master (static) budget variance for the period.) Was this variance favorable (F) or unfavorable (U)?

2. Compute the July sales volume variance and the flexible-budget variance for the month, both in terms of contribution margin and in terms of operating income.

4. Prepare pro forma budgets for activities within its relevant range of operations. Prepare a flexible budget for each of the following two output levels: a. 3,850 units. b. 4,250 units.