The following is a summarized master budget that Clarenville Company prepared for January:

Static Sales 9,000 units Actual Sales 8,500 units

Sales $450,000 $467,500

Variable expenses:

Manufacuturing 270,000 272,000

Selling and administrative 18,000 12,750

Contribution margin 162,000 182,750

Fixed expenses:

Manufacuturing 72,000 72,000

Selling and administrative 27,000 27,000

Operating income $63,000 $83,750

Required:

1. Prepare flexible budget performance report for January.

Clarenville Company

Flexible Budget Performance Report

For the Month Ended January 31

Actual number of Units8,500

Actual Flexible Budget Flexible Budget Variance

2. Prepare comprehensive performance report for January. Assume that the static budget for January was based on an activity level of 9,000 cars. (8 marks)

Actual (8,500). Flexible Budget Variance. Flexible Budget (8,500). Sales Volume Variance Static Budget (9000)