Problem 17-45 (Static) Analyze Performance for a Restaurant (LO 17-6)

Dougs Diner is planning to expand operations and is concerned that its reporting system might need improvement. The master budget income statement for the Downtown Dougs, which contains a delicatessen and restaurant operation, follows (in thousands).

	Delicatessen						Restaurant						Total
Sales revenue		$	1,000					$	2,500				$	3,500
Costs
Purchases			600						1,000					1,600
Hourly wages			50						876					926
Franchise fee			30						76					106
Advertising			100						200					300
Utilities			70						126					196
Depreciation			50						76					126
Lease cost			30						50					80
Salaries			30						50					80
Total costs		$	960					$	2,454				$	3,414
Operating profit		$	40					$	46				$	86

The company uses the following performance report for management evaluation.

	DOWNTOWN DOUGS
	Net Income for the Year
	($000)
	Actual Results
Actual Results	Delicatessen						Restaurant				Total				Budget				Over- or (Under-) Budgeta
Sales revenue		$	1,200				$	2,000			$	3,200			$	3,500				$	(300	)
Costs
Purchasesb			780					800				1,580				1,600				$	(20	)
Hourly wagesb			60					700				760				926					(166	)
Franchise feeb			36					60				96				106					(10	)
Advertising			100					200				300				300
Utilitiesb			76					100				176				196					(20	)
Depreciation			50					76				126				126
Lease cost			30					50				80				80
Salaries			30					50				80				80
Total costs		$	1,162				$	2,036			$	3,198			$	3,414				$	(216	)
Operating profit		$	38				$	(36	)		$	2			$	86				$	(84	)

^a There is no sales price variance.

^b Variable costs; all other costs are fixed.

Required:

Prepare a profit variance analysis for the delicatessen segment. (Hint: Use sales revenue as your measure of volume.) (Do not round intermediate calculations. Enter your answers in thousands of dollars. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)