Brabham Enterprises manufactures tires for the Formula I motor racing circuit. For August $2020,$ it budgeted to manufacture and sell $3,000$ tires at a variable cost of $$73$ per tire and total fixed costs of $$57,000.$ The budgeted selling price was $$111$ per tire. Actual results in August $2020$ were $2,700$ tires manufactured and sold at a selling price of $$113$ per tire. The actual total variable costs were $$218,700,$ and the actual total fixed costs were $$53,500.$

Read the requirements.

Requirement $1.$ Prepare a performance report with a flexible budget and a static budget.

Begin with the actual results, then complete the flexible budget columns and the static budget columns. Label each variance as favorable or unfavorable. $($For variances with a $$0$ balance, make sure to enter $"0"$ in the appropriate field. If the variance is zero, do not select a label.$)$

$\backslash$table$[[,\backslash$table$[[$Actual$],[$Results$]],\backslash$table$[[$Flexible$-$Budget$],[$Variances$]],\backslash$table$[[$Flexible$],[$Budget$]],\backslash$table$[[$Sales$-$Volume$],[$Variances$]],\backslash$table$[[$Static$],[$Budget$]]],[$Units sold,,,,,$],[$Revenues$,,,,,],[$Variable costs,,,,,$],[$Contribution margi,,,,,$],[$Fixed costs,,,,,$],[$Operating income,,$\frac{?}{\text{b}\text{a}\text{r}}(),,,]]$

Requirement $2.$ Comment on the results in requirement $1.$

The total static$-$budget variance in operating income is There is $a(n)$ total flexible$-$budget variance and $a(n)$ sales$-$volume variance. The sales$-$volume variance arises solely because actual units manufactured and sold were than the budgeted $3,000$ units. The flexible$-$budget variance in operating income is due primarily to the in unit variable costs.