The president was told that the fixed expenses of $136,000 included $96,000 that had been split evenly between divisions because they were general corporate expenses. After looking at the statement, the president exclaimed, "I knew it! Division B is a drag on the whole company. Close it down!" Required: a. Evaluate the president's remark. The president's remark ignores the misleading result of arbitrarily allocated fixed expenses. The president's remark ignores the misleading result of arbitrarily allocated variable expenses. b. Calculate what the company's net income would be if Division B were closed down. c. What is the policy statement related to the allocation of fixed expenses. Never arbitrarily allocate fixed expenses. Never arbitrarily allocate variable expenses. Acme Company's production budget for August is 19,300 units and includes the following component unit costs: direct materials, $9.00; direct labor, $11.80; variable overhead, $5.80. Budgeted fixed overhead is $50,000. Actual production in August was 21,870 units. Actual unit component costs incurred during August include direct materials, $10.00; direct labor, $11.20; variable overhead, $7.00. Actual fixed overhead was $53,300. The standard direct labor cost per unit consists of 0.5 hour of labor time at $23.6 per hour. During August, $244,944 of actual labor cost was incurred for 9,720 direct labor hours. Required: Calculate the labor rate variance and labor efficiency variance for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)