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PRo Ject Decision Cases C10-76 Compute flexible budget and sales velume variancesing Objnctive 2 ReelTime distributes DVDs to movle retailers, incluading dot-coms. ReelTime's top managemment meets monthly to evaluabe the company's pertormance. Controler Terri Lon prepared the ng performance report for the meeting folow Lon also revealed that the actual sales price of $20 per movie wan equai so the bd tales price were no changes in inventories or Management is disappointed by the operating income results, EEO Lyle Nesbm exclaims How can actual epenuncome be roughly 1 3% ofthe static budet amount when then at gmany favcrable REELTIME, INC Income Statetmet Performance Repors Month Ended July 31 Actual Revales Static Variable expenses Cos of goods sol Sales commsuons hipping expense 773,750 77,375 2,830 00204,250 107,800 53,900 0,425P 11,050 Fixed expea Salary expesse 10950U 208,750 5,250 F 20,000 U 214,000 Rent expense Advertising expecse 128,20 108,20 68,500 Total expenies Requirements 1. Prepare a more informative performance report. Be sure to include a flexible budget for 2. As a member of ReelTime's management team, which variances would you want investi- 3. Nesbiltt believes that many consumers are postponing purchases of new movies until the actual number of DVDs bought and sold. gated? Why? after the introduction of a new format for recordable DVD players. In light of this infor- mation, how would you rate the company's performance

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