Phone Technologies manufactures capacitors for cellular base stations and other communications applications. The company's July 2018 flexible budget shows output levels of 8,500, 10,000, and 12,000 units. The static budget was based on expected sales of 10,000 units. The company sold 12,000 units during July. Its flexible budget and actual operating income was as follows:

i Data Table Phone Technologies Flexible Budget For the Month Ended July 31, 2018 Budget Amount per Unit Units 8.500 10.000 12.000 Sales Revenue $ 25 $ 14 212,500 $ 93,500 250,000 $ 110,000 300,000 132,000 Variable Expenses Contribution Margin 119,000 56,000 63,000 $ 140,000 56,000 168,000 56,000 Fixed Expenses $ 84,000 $ 112,000 Operating Income i Data Table Phone Technologies Income Statement For the Month Ended July 31, 2018 Sales Revenue 307,000 137,200 Variable Expenses Contribution Margin 169,800 57,500 Fixed Expenses 112,300 Operating Income A Requirements 1. Prepare a flexible budget performance report for July 2. What was the effect on Phone's operating income of selling 2,000 units more than the static budget level of sales? 3. What is Phone's static budget variance for operating income? 4. Explain why the flexible budget performance report provides more useful information to Phone's managers than the simple static budget variance. What insights can Phone's managers draw from this performance report? Requirement 1. Prepare a flexible budget performance report for July (Enter a "0" for any zero balances. For any $0 variances, leave the Favorable (Fy/Unfavorable (U) input blank.) Phone Technologies Flexible Budget Performance Report For the Month Ended July 31, 2018 2 (1)-(3) 3 5 4 (3) -(5) Flexible Budget Amounts Per Unit Sales Volume Budget Actual Results Flexible Budget Static Budget Variance Variance Units Sales Revenue Variable Expenses Contribution Margin Fixed Expenses Operating Income