Nice'n Company 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 $78 per tire and total fixed costs of $57,000. The budgeted selling price was $108 per tire. Actual results in August 2017 were 3,100 tires manufactured and sold at a selling price of $ 109 per tire. The actual total variable costs were $ 263,500, and the actual total fixed costs were $52,500.

Requirement 1. Prepare a performance report that uses a flexible budget and a static budget. 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 Flexible Static Flexible-Budget Variances Sales-Volume Variances Results Budget Budget Units sold Revenues Variable costs Contribution margin Fixed costs Operating income Requirement 2. Comment on the results in requirement 1. The total static-budget variance in operating income is $ There is an) total flexible-budget variance and a(n) sales-volume variance. The sales-volume variance arises solely because actual units manufactured and sold were than the budgeted 3,300 units. The flexible-budget variance in operating income is due primarily to the in unit variable costs