Magnet Technologies manufactures refrigerator magnets for companies as promotional items. The company's July 2021 Flexible Budget shows output levels of 3,000, 5,000 and 7,000 units. The static budget was based on 5,000 units.

	Budget Formula
Units		3,000	5,000	7,000
Sales	$40	$120,000	$200,000	$280,000
Variable Expenses	$19	$57,000	$95,000	$133,000
Contribution Margin		$63,000	$105,000	$147,000
Fixed Expenses		$32,000	$32,000	$32,000
Net Income		$31,000	$73,000	$115,000

The company sold 7,000 units and it's actual results are as follows:

Sales	$297,000
Variable Expenses	$151,000
Contribution Margin	$146,000
Fixed Expenses	$34,000
Net Income	$112,000

Required:

1. Prepare the Flexible Budget Performance Report

2. What is the effect on net income on Magnet Technologies from selling more units that the Master Budget anticipated?

3. Why are flexible budget reports useful to managers?

USE TEMPLATE BELOW

Magnet Technologies
Flexible Budget Performance Report
Month Ended July 31, 2019
	Budget Formula	Actual Results	Flexible Budget Variance	Fav/Unfav	Flexible Budget	Sales Volume Variance	Fav/Unfav	Static (Master) Budget
Units
Sales Revenue
Variable Expenses
Contribution Margin
Fixed Expenses
Operating Income
2
3