Treanor enterprises manufactures tires for the Formula 1 motor racing circuit. For August 2014,

it budgeted to manufacture and sell 3,200 tires at a variable cost of $77 per tire and total fixed costs of

$52,000. The budgeted selling price was $115 per tire. Actual results in August 2014 were 3,000 tires manufactured and sold at a selling price of $119 per tire. The actual total variable costs were $255,000,

and the actual total fixed costs were $48,500.

Requirements

1. Prepare a performance report that uses a flexible budget and a static budget.

2. Comment on the results in requirement 1.

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
	Results
Units sold
Revenues
Variable costs
Contribution margin
Fixed costs
Operating income