Based on the information in the attachments, what areas should management investigate further? Please explain your answer.

Crafts Inc., is a manufacturer of furniture The company has 2 responsibility centers: Production and Selling and Distribution. Production and administration are cost centers while Selling and Distribution is a profit center Presented below are the budgeted and actual contribution income statement for October along with applicable unit information Budgeted unit information: Unis Sale price per Unit Direct material per unit Direct labor per unit Variable manufacturing overhead per unit Variable selling and distribution per unit Actual Units: Craft Inc. Budgeted Contribution Income Statement For Month of October $ 195,200 Sales Less Variable costs Variable cost of goods sold: Direct materials Direct labor Manufacturing overhead S 38,400 14,400 12,800 S 65,600 36,000 Selling and distribution Contribution Margin (101,600) 93,600 Less Fixed Costs: Manufacturing overhead Selling and Distribution 40,000 30,000 70,000) Net Income 22.000 Craft Inc. Actual Contribution Income Statement For Month of October $ 230.000 Sales Less Variable costs Variable cost of goods sold: Direct materials Direct labor Manufacturing overhead 40.000 15.000 13.500 S 68.500 39.000 Selling and distribution Contribution Margin (107.500) 122.500 Less Fbced Costs: Manufacturing overhead Selling and Distribution 39,000 31,000 70,000) Net Income Loss) 52.500 Production Department Flexible Budget Performance Report For Month of October Flexible Flexible Budget Budget Designation Actual costs Cost Variances U or F 825 800 25 U Units $ $ Direct Materials Direct Labor Variable Manufacturing overhead Fixed Manufacturing Total 40,000 15,000 13,500 39,000 107,500 $39.600 14.850 13.200 40.000 $ 107,650 400 U 150 U 300 U (1,000) F (150) F $ $ 2. Prepare a flexible budget performance report for selling and distribution that compares actual and allowed costs. Selling and Distribution Cost Center Flexible Budget Performance Report For Month of October Flexible Flexible Budget Budget Actual costs Cost Variances 825 800 Designation U or F 25 U Units $ $ Selling and Distribution: Variable Fixed Total 39,000 S 37,125 31.000 30,000 70,000 S 67,125 1,875 U 1,000 U 2,875 U $ $