EXHIBIT 14.4 Breakdown of Total Operating Income Variance SCHMIDT MACHINERY COMPANY Analysis of Financial Results For...

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EXHIBIT 14.4 Breakdown of Total Operating Income Variance SCHMIDT MACHINERY COMPANY Analysis of Financial Results For October 2019 (1) (2) Flexible-Budget (3) Flexible (4) Sales Volume (5) Master (Static) Actual Variances Budget Variances Budget Units 780 780 220U 1,000 Sales $639,600 $15,600F $624,000 $176,000U $800,000 Variable costs 350,950 50F 351,000 99,000F 450,000 Contribution margin $288,650 $15,650F $273,000 $ 77,000U $350,000 Fixed costs 160,650 10,650U 150,000* 0 150,000* Operating income $128,000 $5,000F $123,000 $ 77,000U $200,000 Analysis of Total Operating-Income Variance Total operating-income variance** =$128,000-$200,000-$72,000U Flexible-budget variance =$128,000-$123,000 Sales volume variance =$123,000 $200,000 =$5,000F =$77,000U *Budgeted fixed factory overhead cost = $120,000; budgeted fixed selling and administrative expense = $30,000. **Also called the total master (static) budget variance. Note: U denotes an unfavorable effect on operating income; F denotes a favorable effect on operating income. EXHIBIT 14.4 Breakdown of Total Operating Income Variance SCHMIDT MACHINERY COMPANY Analysis of Financial Results For October 2019 (1) (2) Flexible-Budget (3) Flexible (4) Sales Volume (5) Master (Static) Actual Variances Budget Variances Budget Units 780 780 220U 1,000 Sales $639,600 $15,600F $624,000 $176,000U $800,000 Variable costs 350,950 50F 351,000 99,000F 450,000 Contribution margin $288,650 $15,650F $273,000 $ 77,000U $350,000 Fixed costs 160,650 10,650U 150,000* 0 150,000* Operating income $128,000 $5,000F $123,000 $ 77,000U $200,000 Analysis of Total Operating-Income Variance Total operating-income variance** =$128,000-$200,000-$72,000U Flexible-budget variance =$128,000-$123,000 Sales volume variance =$123,000 $200,000 =$5,000F =$77,000U *Budgeted fixed factory overhead cost = $120,000; budgeted fixed selling and administrative expense = $30,000. **Also called the total master (static) budget variance. Note: U denotes an unfavorable effect on operating income; F denotes a favorable effect on operating income.