Question
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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