Burton Transportation Company's general manager reports quarterly to the company president firm's operating performance. The company uses a budget based on detailed expectations forthcoming quarter. The general manager has just received the condensed quarterly perfo report shown in Exhibit 8-10. 8-AI Flexible and Static Budgets on the for the nce rma ud-sidixon Although the general manager was upset about not obtaining enough revenue, she was ha ormance was favorable; otherwise, her net income would be even worse. ppy that her cost The president was not satisfied with the performance report and remarked, "I can see so enue coincided with our best guess for budget purposes. But I can't see how this performance repont me merit in comparing actual performance with budgeted performance because we can see whether actual rev helps me evaluate cost-control performance." 1. Prepare a columnar flexible budget for Burton Transportation at revenue levels of $7,200,000 Assume that the prices and mix of products sold are equal to the budgeted prices and mix. $8,000,000, and $8,800,000. Use the format of the last three columns of Exhibit 8-2, page 327. 2. Write out the flexible budget formula for costs as a function of revenue. 3. Prepare a condensed table showing the static budget variance, the sales-activity variance, and the flexible-budget variance. Use the format of Exhibit 8-5, page 330. Burton Transportation Company's general manager reports quarterly to the company president firm's operating performance. The company uses a budget based on detailed expectations forthcoming quarter. The general manager has just received the condensed quarterly perfo report shown in Exhibit 8-10. 8-AI Flexible and Static Budgets on the for the nce rma ud-sidixon Although the general manager was upset about not obtaining enough revenue, she was ha ormance was favorable; otherwise, her net income would be even worse. ppy that her cost The president was not satisfied with the performance report and remarked, "I can see so enue coincided with our best guess for budget purposes. But I can't see how this performance repont me merit in comparing actual performance with budgeted performance because we can see whether actual rev helps me evaluate cost-control performance." 1. Prepare a columnar flexible budget for Burton Transportation at revenue levels of $7,200,000 Assume that the prices and mix of products sold are equal to the budgeted prices and mix. $8,000,000, and $8,800,000. Use the format of the last three columns of Exhibit 8-2, page 327. 2. Write out the flexible budget formula for costs as a function of revenue. 3. Prepare a condensed table showing the static budget variance, the sales-activity variance, and the flexible-budget variance. Use the format of Exhibit 8-5, page 330
