Lothrop Consulting Group is a small firm that offers services to two business segments: not-for-profits (NFPS) and Corporate clients. Lothrop's business model is to rely to a great extent on non-employee consultants (called "advisors") who are paid on an hourly basis. Lothrop is planning to expand operations into international markets and is concerned that its reporting system might need improvement. The master budget income statement for the company's latest quarter follows (in thousands). Sales revenue Costs Advisor compensation Miscellaneous expenses Travel Equipment rental Advertising Depreciation Lease cost Salaries Actual Results Sales revenue Costs Advisor compensation Miscellaneous expensesb Travelb Equipment rentalb Advertising Depreciation Lease cost Salaries NFP $2,200 Total costs Operating profit $ 607 57 137 275 37 57 87 198 $ 1,447 $ 753 Corporate $3,200 $ 1,280 96 608 256 87 Total costs Operating profit The company uses the following performance report for management evaluation: $2,970 $ 230 NFP $2,600 $ 1,074 62 143 117 49 57 83 157 403 101 132 a There is no sales price variance. b Variable costs: costs not identified as variable are fixed $1,735 $ 865 Total $5,400 Lothrop Consulting Group Net Income for the Quarter (s000) $ 1,887 153 745 531 124 140 244 593 $ 983 Corporate $ 2,700 $ 1,244 62 788 320 82 83 300 260 $3,131 $ (431) Total $ 5,300 $ 2,318 124 923 437 131 140 401 392 $4,866 $ 434 Budget $ 5,400 $ 1,887 153 745 531 124 140 244 593 $4,417 $ 983 Over- or (Under-) Budget $(100) $ 431 (29) 178 (94) 7 Required: Note: Do not round intermediate calculations. Enter your answers in thousands of dollars. Indicate the effect of each variance by a the Business of Lothrop. (Hint Use sales revenue as measure of volume) selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. 157 (201) $ 449 $(549) Sales revenue Variable costs Advisor compensation Miscellaneous expenses Travel Equipment rental Total variable costs Contribution margin Fixed costs Advertising Depreciation Lease cost Salaries Total fixed costs Operating profe S $ $ S $ Actual 2,700 1,244 62 780 320 2,406 294 82 83 300 260 725 (431) Operating Cost Variances Marketing and Administrative Variances Flexible Budget Activity Variance Master Budget $ $ $ S $ 3.200 1,280 96 608 256 2.240 900 87 83 157 403 730 230