Walcker Transportation Company's general manager reports quarterly to the company president on the firm's operating performance. The company uses a Although the general manager was upset about not obtaining enough revenue, she was happy that her cost performance was favorable; otherwise, her net budget based on detailed expectations for the forthcoming quarter. The general manager has just received the condensed quarterly performance report shown income would be even worse. The president was not satisfied with the performance report and remarked, "I can see some merit in comparing actual below. 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." (Click the icon to view the quarterly performance report.) Read the requirements Requirement 1. Prepare a columnar flexible budget for Walcker Transportation at revenue levels of $12,600,000, $13,000,000, and $13,400,000. Assume that the prices and mix of products sold are equal to the budgeted prices and mix. Begin with the flexible budget at revenues of $12,600,000, next, complete the flexible budget at revenues of $13,000,000 and, then, prepare the flexible budget at revenues of $13,400,000. (Enter all costs as positive numbers.) Walcker Transportation Company Flexible Budgets for Various Levels of Sales Net revenue 12,600,000 $ 13,000,000 $ 13,400,000 Variable Costs Fuel 504,000 $ 520,000 $ 536,000 Repairs and maintenance 378,000 390,000 402,000 Supplies and miscellaneous 2,016,000 2,080,000 2,144,000 Variable payroll 7.812,000 8.060,000 8,308,000 Total variable costs $ 10,710,000 $ 11,050,000 $ 11,390,000 Fixed Costs Supervision 160,000 $ 160,000 $ 160,000 Rent 200,000 200,000 200,000 Depreciation 460,000 460,000 460,000 Other fixed costs 170,000 170,000 170,000 Total fixed costs 990.000 990.000 990,000 fixed and variable costs $ 11,700,000 $ 12,040,000 $ 12,380,000 900.000 960,000 1,020.000 Operating income Requirement 2. Write out the flexible budget formula for costs as a function of revenue. (Enter any proportions in decimal form to two decimal places, .XX.) Cost 0.85 x Revenue $ 990,000 Requirement 3. Prepare a condensed table showing the static budget variance, the sales-activity variance, and the flexible-budget variance.Requirement 3. Prepare a condensed table showing the static budget variance, the sales-activity variance, and the flexible-budget variance. Begin with the actual results, then complete the flexible budget columns and the static budget columns. Label each variance as favorable or unfavorable. (Enter all amounts as positive numbers. 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 at Actual Activity Level Net revenue Variable costs Contribution margin Fixed costs Operating incomeData Table Budget Actual Variance Net revenue $ 13,000,000 $ 12,700,000 $ 300,000 U Variable Costs Fuel 520,000 $ 516,000 $ 4,000 F Repairs and maintenance 390,000 398,000 8,000 U Supplies and miscellaneous 2,080,000 2,070,000 10,000 F Variable payroll 8,060,000 7,940,000 120,000 F Total variable costs* 11,050,000 $ 10,924,000 $ 126,000 F Fixed Costs Supervision 160,000 $ 177,000 $ 17,000 U Rent 200,000 200,000 Depreciation 460,000 460,000 Other fixed costs 170,000 163,000 7,000 Total fixed costs 990,000 1,000,000 10,000 U Total fixed and variable costs 12,040,000 $ 11,924,000 $ 116,000 F 960,000 $ 776,000 $ Operating income 184,000 U U = Unfavorable. F = Favorable *For purposes of this analysis, assume that all these costs are totally variable with respect to sales revenue. In practice, many are mixed and have to be subdivided into variable and fixed components before a meaningful analysis can be made. Also, assume that the prices and mix of services sold remain unchanged