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

	Actual			Master Budget
Units		3,800			4,000
Sales revenue	$	53,200		$	60,000
Variable manufacturing costs		19,000			16,000
Fixed manufacturing costs		16,000			15,000
Variable selling and administrative expenses		7,700			8,000
Fixed selling and administrative expenses		10,000			9,000

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)?

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. 3,750 units.

b. 4,150 units.