Prepare and interpret a performance report (Learning Objective 2)
Refer to the Digital Technologies data in P11-47B. The company sold 11,000 units during October 2007, and its actual operating income was as follows:

Requirements 1. Prepare an income statement performance report for October in a format similar to Exhibit 11-7.
2. What was the effect on Digital Technologies’ operating income of selling 2,000 units more than the static budget level of sales?
3. What is Digital Technologies’ static budget variance? Explain why the income statement performance report provides more useful information to Digital Technologies’ managers than the simple static budget variance. What insights can Digital Technologies’ managers draw from this performance report?

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Sales revenue. Variable expenses: DIGITAL TECHNOLOGIES Income Statement Month Ended October 31, 2007 Cost of goods sold. Sales commissions... Shipping expense Fixed expenses: Salary expense Depreciation expense. Rent expense. Insurance expense. Total expenses........... Operating income... $257,000 112,250 11,800 8,950 36,650 12,750 22,500 4,700 209,600 $ 47,400