EXHIBIT 14.1 Comparison of Actual and Budgeted Operating Income SCHMIDT MACHINERY COMPANY Analysis of Operating Income For October 2019 Actual Operating Income 780 Units (2) (3) Master (Static) Budget Variances 1.000 220U $800.000 100% $ 160,400U 450,000 56 99,050F Sales 100% $639.600 350.950 Variable costs 55 45% 44% $ 61,350U Contribution margin $288,650 Fixed costs Operating income $128.000 $350,000 150.000 160,650*** 19 10,650U 25 20% $200.000 25% $ 72,000U *U denotes an unfavorable effect on operating income. **F denotes a favorable effect on operating income. ***Actual fixed factory overhead cost = $130,650; actual fixed selling and administrative costs = $30.000. #Budgeted fixed factory overhead cost = $120,000; budgeted fixed selling and administrative costs = $30,000 Assume that in October 2019 the Schmidt Machinery Company (Exhibit 14.1) manufactured and sold 980 units for $750 each. During this month, the company incurred $529,200 total variable costs and $181,300 total fixed costs. The master (static) budget data for the month are as given in Exhibit 14.1. Required: 1. Prepare a flexible budget for the production and sale of 980 units. 2. Compute for October 2019: a. The sales volume variance, in terms of operating income. Indicate whether this variance was favorable (F) or unfavorable (U). b. The sales volume variance, in terms of contribution margin. Indicate whether this variance was favorable (F) or unfavorable (U). 3. Compute for October 2019: a. The total flexible-budget (FB) variance. Indicate whether this variance was favorable (F) or unfavorable (U). b. The total variable cost flexible-budget variance. Indicate whether this variance was favorable (F) or unfavorable (U). c. The total fixed cost flexible-budget (FB) variance. Indicate whether this variance was favorable (F) or unfavorable (U). d. The selling price variance. Indicate whether this variance was favorable (F) or unfavorable (U). Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3