CYou're supposed to use the data for budget and actual as given in Exhibit 8-12, as the basis to prepare a flexible budget for the company at forecasted revenue levels of $12.6 million, $13 million, and $13.4 Million. What you have in exhibit 8-12 (left column) is a static budget at $13 million (compared to actual revenue level of $12.7 Million in the middle column), which (the left column, I mean) you can use to get the total fixed costs and unit-variable cost relationships to adapt to the 2 other flexible budget levels required (12.6 and 13.4M). You are to use the format of Exhibit 8.3 in designing and preparing the flexible budget. Then in part 3 they want you to use the format on Exhibit 8-6, to take your original static budget, Exhibit 8-12, and break out that static budget information into flexible budget variances and sales activity variances. So you're using all 3; exhibit 8-12 is needed to get the actual cost relationships to apply to the 2 other levels of budgeted number, exhibit 8.3 is needed to see how to set up the flexible budget, and Exhibit 8.6 to do the static budget and activity variances.Where asked, you must say whether a particular variance is favorable (F) or unfavorable (U) in order to receive full credit.

A	B	C	D	E	F	G	H	XX	XX	XX
part 1
			walcker	transportation	company
					flexible	budget	amounts
revenue					$12,600,000	$13,000,000	$13,400,000
Variable expenses (based on % of budgeted revenue)
				Variable cost %s:
Fuel				4%		520,000
Repairs and maintenance
Supplies and miscellaneous
Variable payroll
Total variable costs					$-	$520,000	$-
Fixed costs (from budget)
supervision					160,000
rent
depreciation
other fixed costs
total fixed costs					$160,000	$-	$-
Total costs charged against revenue					160,000	520,000	$-
Operating income
Part 2.
Total cost formula: $"[____?____]" per quarter (fixed cost) plus ."[__%]" (variable cost) of revenue
Part 3. (see format of Exhibit 6, page 316)
			Actual Results at Actual Activity Level	Flexible Budget Variances (column D - col G)	Favorable or Unfavorable	Flexible Budget for Actual Sales Activity	Sales Activity Variances (column G - col J)	Favorable or Unfavorable	Static Budget
revenue			$12,700,000	-0-		$12,700,000	(300,000)		$13,000,000
total variable costs			10,924,000
contribution margin			1,776,000
fixed costs			1,000,000				-0-
operating income			$776,000