Salvatore Transportation Company's general manager reports quarterly to the company president on the firm's operating performance. The company uses a budget based on detailed expectations for the forthcoming quarter. The general manager has just received the condensed quarterly performance report shown below. (Click the icon to view the quarterly performance report.) Although the general manager was upset about not obtaining enough revenue, she was happy that her cost performance was favorable; otherwise, her net income would be even worse. The president was not satisfied with the performance report and remarked, "I can see some merit in comparing actual performance with budgeted performance because we can see whether actual revenue coincided with our best guess for budget purposes. But I can't see how this performance report helps me evaluate cost-control performance." Read the requirements $ 15,550,000 Net revenue Variable Costs Fuel - X Repairs and maintenance Requirements Supplies and miscellaneous Variable payroll Total variable costs Fixed Costs 1. Prepare a columnar flexible budget for Salvatore Transportation at revenue levels of $15,550,000, $16,000,000, and $16,450,000. Assume that the prices and mix of products sold are equal to the budgeted prices and mix. 2. Write out the flexible budget formula for costs as a function of revenue. 3. Prepare a condensed table showing the static budget variance, the sales activity variance, and the flexible-budget variance. Supervision Rent Depreciation Other fixed costs Print Done Total fixed costs Total fixed and variable costs Operating income Data table Actual Variance Budget 16,000,000 $ Net revenue $ 15,500,000 $ 500,000 U Variable Costs Fuel $ 320,000 $ 318,000 $ Repairs and maintenance 160,000 162,000 2,000 F 2,000 U 10,000 F 140,000 F Supplies and miscellaneous 1,600,000 8,320,000 1,590,000 8,180,000 Variable payroll Total variable costs* $ 10,400,000 $ 10,250,000 $ 150,000 F Fixed Costs Supervision $ 179,000 $ 24,000 U Rent 195,000 155,000 $ 195,000 460,000 130,000 Depreciation 460,000 121,000 Other fixed costs 9,000 F Total fixed costs 940,000 955,000 15,000 $ Total fixed and variable costs 11,340,000 $ 11,205,000 $ 135,000 F $ 4,660,000 $ 4,295,000 $ Operating income 365,000 U Print Done