Doug's Diner is planning to expand operations and is concerned that its reporting system might need improvement. The masterbudget income statement for the Downtown Doug's, which contains a delicatessen and restaurant operation, follows (in thousands).DelicatessenRestaurantTotalSales revenue$700$2,000$2,700CostsPurchases3851,1001,485Hourly wagesFranchise fee35437472214061AdvertisingUtilities501001504963112DepreciationLease cost253863152540Salaries152540Total costs$595$1,828$ 172$2,423$ 277Operating profit$105The company uses the following performance report for management evaluation.DOWNTONN DOUG'SNet Income for the Year($000)Actual ResultsOver- or(Under-)Budget$(900)Actual ResultsDelicatessen$ 800TotalBudget$2,700RestaurantSales revenue$1,000$1,800CostaPurchases4654008651,485$(620)Hourly wagesFranchise feeAdvertisingUtilitiesDepreciationLease cont40350390472(82)24305461(7)501001501505350103112(9)2538636315254040Salaries15254040$2,423$ 277Total costs$ 687$1,018$1,705$(718)Operating profit$ 113(18)95$(182)There is no sales price variance.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.) (Indicate theeffect of each variance by selecting "E" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Donot round your intermediate calculations. Enter your answers in thousands of dollars.)Marketing &AdministrativeFlexibleMasterActualPurchases VariancesActivity VarianceBudgetBudgetVariancesSales revenue800700Variable costs:Purchases465385Hourly wages4035Franchise fee2421Utilities5349Total variable costs58224490Contribution margin218210Fixed costs:Advertising5050Depreciation2525Lease1515Salaries1515Total fixed costs10524105Operating profit113105

Actual Purchase Variances Marketing & Administrative Variances Flexible Budget Activity…

Doug's Diner is planning to expand operations and is concerned that its reporting system might need improvement. The master budget income statement for the Downtown Doug's, which contains a delicatessen and restaurant operation, follows (in thousands). Delicatessen Restaurant Total Sales revenue $700 $2,000 $2,700 Costs 385 1,485 472 Purchases 1,100 Hourly wages Franchise fee 35 437 21 40 61 Advertising Utilities 50 100 150 49 63 112 Depreciation 25 38 63 Lease cost 15 25 40 Salaries 15 25 40 Total costs $595 $1,828 $2,423 $ 277 Operating profit $105 $ 172 The company uses the following performance report for management evaluation. DOWNTONN DOUG'S Net Income for the Year ($000) Actual ResultB Over- or (Under-) Budget $(900) Actual Results Delicatessen Rentaurant Total Budget $2,700 Sales revenue S 800 $1,000 $1,800 Costa Purchases 465 400 865 1,485 $(620) Hourly wagesb Franchise fee Advertising Utilities Depreciation 40 350 390 472 (82) 24 30 54 61 (7) 50 100 150 150 53 50 103 112 (9) 25 38 63 63 Lease cost 15 25 40 40 Salaries 15 25 40 40 $2,423 $ 277 Total costs $687 $1,018 $1,705 $(718) Operating profit $113 (18) 95 $(182) 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.) (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. Do not round your intermediate calculations. Enter your answers in thousands of dollars.) Marketing & Administrative Flexible Budget Master Actual Purchases Variances Activity Variance Budget Variances Sales revenue 800 700 Variable costs: Purchases 465 385 Hourly wages 40 35 Franchise fee 24 21 Utilities 53 49 Total variable costs 582 490 Contribution margin 218 210 Fixed costs: Advertising 50 50 Depreciation 25 25 Lease 15 15 Salaries 15 15 Total fixed costs 105 105 Operating profit 113 105