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 SG&A Costs	$8,700	$8,000
Fixed SG&A Expenses	$10,100	$10,000

Required:

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)?

Total Operating Income Variance

?

?

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.

	Flexible-Budget Variance		Sales Volume Variance
Contribution Margin	?	?	?	?
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.

	Flexible budget (a.)	Flexible budget (b.)	Master Budget
Units	?	?	4,000
Sales	?	?	$60,000
Variable costs:
Manufacturing	?	?	$16,000
SG&A	?	?	$8,000
Total Variable Costs	?	?	$24,000
Contribution Margin	?	?	$36,000
Fixed costs:
Manufacturing	?	?	$13,900
SG&A	?	?	$10,000
Total fixed costs	?	?	$23,900
Operating Income	?	?	$12,100