Refer to the information in Problem 21-1B. Tohono Company’s actual income statement for 2017 follows.

Required 

1. Prepare a flexible budget performance report for 2017.
Analysis Component 

2. Analyze and interpret both the

(a) sales variance and

(b) direct materials cost variance.

Data From Problem 21-1B

Tohono Company’s 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 20,000 units.

TOHONO COMPANY Statement of Income from Operations For Year Ended December 31, 2017 Sales (24,000 units). Cost of goods sold $3,648,000 Direct materials.. $1,400,000 Direct labor... 360,000 Machinery repairs (variable cost) 60,000 Depreciation-Machinery 250,000 Utilities (variable cost, $64,000).. 218,000 Plant manager salaries. 155,000 2,443,000 Gross profit.... 1,205,000 Selling expenses Packaging.... 90,000 Shipping 124,000 Sales salary (annual) 162,000 376,000 General and administrative expenses Advertising expense 104,000 Salaries 232,000 Entertainment expense. 100,000 435,000 Income from operations.... $ 393,000