Carlson Enterprises manufactures tires for the Formula 1 motorracing circuit. For August 2017?,
it budgeted to manufacture and sell 3,300 tires at a variablecost of $72 per tire and total fixed costs of $53,000.The budgetedselling price was $110 per tire. Actual results in August 2017 were3,200 tires manufactured and sold at a selling price of $112
per tire. The actual total variable costs were $256,000?,
and the actual total fixed costs were $48,000.
Requirement 1. Prepare a performance report that uses a flexiblebudget and a static budget.
Begin with the actual? results, then complete the flexiblebudget columns and the static budget columns. Label each varianceas favorable or unfavorable.? (For variances with a? $0 balance,make sure to enter? "0" in the appropriate field. If the varianceis? zero, do not select a? label.)
| Actual |
| Results |
Units sold | |
Revenues | |
Variable costs | |
Contribution margin | |
Fixed costs | |
Operating income | |
Flexible-Budget | Flexible |
Variances | Budget |
| | |
| | |
| | |
| | |
| | |
| | |
Sales-Volume | Static |
Variances | Budget |
| | |
| | |
| | |
| | |
| | |
| | |
Requirement 2. Comment on the results in requirement 1.
The total static-budget variance in operating income is $ | | | There is a(n) | | total flexible-budget |
variance and a(n) | | sales-volume variance. The sales-volume variance arises solelybecause actual units |
manufactured and sold were | | than the budgeted 3,300 units. The flexible-budget variance inoperating income is due |
primarily to the | | in unit variable costs. |
