Cell Plus Technologies manufactures capacitors for cellular base stations and other communication applications. The company's July 2018 flexible budget shows output levels of 8,500, 10,000, and 12,000 units. The static budget was based on expected sales of 10,000 units.

CELL ONE TECHNOLOGIES

Flexible Budget

For the Month Ended July 31, 2018

The company sold 12,000 units during July, and its actual operating income was as follows:
CELL ONE TECHNOLOGIES
Income Statement
For the Month Ended July 31, 2018
Sales Revenue ...................................... $ 295,000
Variable Expenses ................................... 161,100
Contributions Margin ............................... 133,900
Fixed Expenses ....................................... 58,000
Operating Income ................................... $ 75,900
Requirements
1. Prepare a flexible budget performance report for July 2018.
2. What was the effect on Cell Plus's operating income of selling 2,000 units more than the static budget level of sales?
3. What is Cell Plus's static budget variance for operating income?
4. Explain why the flexible budget performance report provides more useful information to Cell Plus's managers than the simple static budget variance. What insights can Cell Plus's managers draw from this performance report?

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Budget Amounts per Unit Units 8,500 10,000 12,000 Sales Revenue $ 24 $ 240,000 $ 288,000 $ 204,000 Variable Expenses 13 110,500 130,000 156,000 Contribution Margin 93,500 110,000 132,000 Fixed Expenses 57,000 57,000 57,000 $ 36,500 $ 53,000 $ 75,000 Operating Income