Sun-Bright Fixtures Company is evaluating a change in operating income between 2012 and 2013. Management has compiled the following data:
Revenues 2012 2013
$49 per fixture × 1,000,000 units; $51 per unit × 1,000,000 units $49,000,000 $51,000,000
Costs
Direct Materials Costs
($1.90 per cm × 5,000,000 cm; $2.20 per cm × 4,850,000 cm) $9,500,000 $10,670,000
Conversion Costs
($5.30 cm × 6,750,000 cm; $5.45 cm × 6,600,000 cm) $35,775,000 $35,970,000
Total Costs
$45,275,000 $46,640,000
Operating Income
Change in Operating Income
Required: Compute the operating incomes for 2012 and 2013 and the change in operating income. Identify whether the change is a favorable change, F, or an unfavorable, U, variance.