Black Tyres
Income Statement
Year Ended 30 June 2018
				budget	variance	flexible budget	variance	actual	total variance
		sales revenue	$'000	30,018	628	30.646	(384)	30,262	244
		variable costs	$'000	(21,012)	(440)	(21.452)	56	(21,396)	(384)
		contribution margin	$'000	9,005	188	9.194	(328)	8,865	(140)
		non-variable costs	$'000	(568)		(568)	10	(558)	10
		net operating profit	$'000	8,437	188	8.626	(318)	8,307	(130)
Product Breakdown
	Low-budget Tyre
		sales volume	tyres	205,000	(9,642)	195,358		195,358
		selling price	$ per tyre	86.460		86.460	(1.721)	84.739	(1.721)
		variable costs	$ per tyre	(60.522)		(60.522)	(0.720)	(61.242)	(0.720)
		contribution margin	$ per tyre	25.938		25.938	(2.441)	23.497	(2.441)
	High-performance Tyre
		sales volume	tyres	97,500	11,595	109,095		109,095
		selling price	$ per tyre	126.087		126.087	(0.441)	125.646	(0.441)
		variable costs	$ per tyre	(88.261)		(88.261)	1.801	(86.460)	1.801
		contribution margin	$ per tyre	37.826		37.826	1.360	39.186	1.360
	Both Products Combined
		sales volume	tyres	302,500	1.953	304,453		304,453
		market share		5.185%	0,036%	5,221%		5.221%
		selling price	$ per tyre	99.232	1,427	100,660	(1,262)	99.397	0.165
		variable costs	$ per tyre	(69.463)	(0,999)	(70,462)	0,183	(70.278)	(0.816)
		contribution margin	$ per tyre	29.770	0,428	30,198	(1,079)	29.119	(0.651)

Black Tyres
Reconciliation
Year Ended 30 June 2018
				$'000	$'000	$'000
Planned net operating profit						8,437
		market size variance		(4)
		market share variance		62
		product mix variance		130
		volume variance			188
		price variance		(384)
		variable cost variance		56
		non-variable cost variance		10
		price/cost variance			(318)
		Total variance				(130)
		rounding error				0
Actual net operating variance						8,307

C. Prepare a short report outlining BTs performance for the year ended 30 June 2018. The focus of your report should be on how the variances may relate to each other. Suggest any issues that may warrant further investigation by Peter.

D. Discuss and analyse sales price and sales volume variances that you have calculated. Are they favourable or unfavourable? What are the drivers of these variances?