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Carlson Enterprises manufactures tires for the Formula 1 motor racing circuit. For August 2017, it budgeted to manufacture and sell 3,300 tires at a variable

Carlson Enterprises manufactures tires for the Formula 1 motor racing circuit. For August 2017, it budgeted to manufacture and sell 3,300 tires at a variable cost of $70 per tire and total fixed costs of $53,500. The budgeted selling price was $107 per tire. Actual results in August 2017 were 3,200 tires manufactured and sold at a selling price of $109 per tire. The actual total variable costs were $249,600, and the actual total fixed costs were $50,500.

Requirements

1.

Prepare a performance report that uses a flexible budget and a static budget.

2.

Comment on the results in requirement 1.

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.)

Actual

Results

Units sold

Revenues

Variable costs

Contribution margin

Fixed costs

Operating income

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