England Technologies manufactures capacitors for cellular base stations and other communications applications. The company's July 2018 flexible budget shows output levels of 8,000, 9,500, and 11,500 units. The static budget was based on expected sales of 9,500 units. The company sold 11,500 units during July. Its flexible budget and actual operating income was as follows: (Click the icon to view the flexible budget.) (Click the icon to view the income statement.) Read the requirements. Requirement 1. Prepare a flexible budget performance report for July. (Enter a "O" for any zero balances. For any $0 variances, leave the Favorable (F)/Unfavorable (U) input blank.) England Technologies Flexible Budget Performance Report For the Month Ended July 31, 2018 1 2 3 - 4 5 (1)-(3) (3) - (5) Budget Flexible Sales Amounts Actual Budget Flexible Volume Static Per Unit Results Variance Budget Variance Budget Units Sales Revenue Variable Contribution Margin Fixed Expenses Operating Income GI Requirement 2. What was the effect on England's operating income of selling 2,000 units more than the static budget level of sales? Selling 2,000 units more than the static budget level of sales England's operating income by $ . Requirement 3. What is England's static budget variance for operating income? England's static budget meaning that its operating variance is $ N income is I per the static budget. than expected Requirement 4. Explain why the flexible budget performance report provides more useful information to England's managers than the simple static budget variance. What insights can England's managers draw from this performance report? Choose two reasons why the flexible budget performance report provides England's managers with more information than the simple static budget variance. England Technologies Income Statement For the Month Ended July 31, 2018 Sales Revenue $ 294,500 Variable Expenses 131,600 Contribution Margin 162,900 Fixed Expenses 58,500 $ 104,400 Operating Income England Technologies Flexible Budget For the Month Ended July 31, 2018 Budget Amount per Unit Units 8,000 9,500 11,500 Sales Revenue 25 $ 200,000 $ 237,500 $ 287,500 Variable Expenses 1188,000 104,500 126,500 Contribution Margin 112,000 133,000 161,000 Fixed Expenses 57,000 57,000 57,000 Operating Income $ 55,000 $ 76,000 $ 104,000 1. Prepare a flexible budget performance report for July. 2. What was the effect on England's operating income of selling 2,000 units more than the static budget level of sales? 3. What is England's static budget variance for operating income? 4. Explain why the flexible budget performance report provides more useful information to England's managers than the simple static budget variance. What insights can England's managers draw from this performance report
