Connolly Enterprises manufactures tires for the Formula I motor racing circuit. For August, it budgeted to manufacture and sell 4,200 tires at a variable cost of $74 per tire and total fixed costs of $64,500. The budgeted selling price was $114 per tire. Actual results in August were 3,800 tires manufactured and sold at a selling price of $116 per tire. The actual total variable costs were $300,200, and the actual total fixed costs were $62,000. Required 1. Prepare a performance report that uses a flexible budget and a static budget. 2. Comment on the results in requirement 1. Requirement 1. Prepare a performance report that uses a flexible budget and a static budget. Begin with the actual results, and then complete the flexible budget columns and the static budget columns. Label each variance as favourable or unfavourable. (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. Use parentheses or a minus sign when entering an operating loss.) Units sold Revenues Variable costs Contribution margin Fixed costs Actual Results Flexible-Budget Variances Flexible Budget Operating income Requirement 2. Comment on the results in requirement 1. The total static-budget variance in operating income is $ There is variance arises solely because actual units manufactured and sold were unit variable costs. Sales-Volume Variances Static Budget total flexible-budget variance and sales-volume variance. The sales-volume in than the budgeted units. The flexible-budget variance in operating income is due primarily to the