Flexible budget. Brabham Enterprises manufactures tires for the Formula I motor racing circuit. For August 2007, Brabham budgeted to manufacture and sell 3,000 tires at a variable cost of $88 per tire and a total fixed cost of $64,800. The budgeted selling price was $132 per tire. Actual results in August 2007 were 2,800 tires manufactured and sold at a selling price of

$134 per tire. The actual total variable costs were $275,520, and the actual total fixed costs were $60,000.

Required 1. Prepare a performance report (akin to Exhibit 7-3, p. 247) that uses a flexible budget and a static budget.

2. Comment on the results in requirement 1.