SP-#4: Budget Performance Report Movies Galore distributes DVDs to movie retailers, including online retailers. Movies Galore's top management meets monthly to evaluate the company's performance. Controller Allen Walsh prepared the following performance report for the meeting: MOVIES GALORE Static Budget Performance Report For the Month Ended July 31, 2016 Budget Variance 1,640,000 $1,960,000 $320,000 U ResultsStatie Cost of Goods Sol ales Commin Shipping Cost 75.00000 205,000F 7,00010800 800 43,000 53,90 0,900 F 815,000 1,141,700 246,700 45.000 818300 3300 otl Variable Costs Comtrbution Margin Foed Costs 11,00000500 10,500U 09,000240 5,000 29,000 108.250 20,750 U 81,000 00 .00 U 30,000 691250 38,750 U 15,000 % 127,060 $112,050 U Salaries Depreciatexn Advertsing Total Fwed Costs Operating Income Walsh also revealed that the actual sale price of $20 per movie was equal to the budgeted sale price and that there were no changes in inventories for the month. Management is disappointed by the operating income results. CEO Jilinda Robinson exclaims "How can actual operating income be roughly 12% of the static budget amount when there are so many favorable variances?" Requirements Prepare a more informative performance report. Be sure to include a flexible budget for the actual number of DVDs bought and sold. As a member of Movies Galore's management team, which variances would you want investigated? Why? Robinson believes that many consumers are postponing purchases of new movies until after the introduction of a new format for recordable DVD players. In light of this information how would you rate the company's performance? 1. 2. 3