Question

Carlson Enterprises manufactures tires for the Formula 1 motor racing circuit. For August 2017​, it budgeted to manufacture and sell 3,300 tires at a variable cost of $70 per tire and total fixed costs of $53,500. The budgeted selling price was $107 per tire. Actual results in August 2017 were 3,200 tires manufactured and sold at a selling price of $109 per tire. The actual total variable costs were $249,600​, and the actual total fixed costs were $50,500.

Requirements

1.	Prepare a performance report that uses a flexible budget and a static budget.
2.	Comment on the results in requirement 1.

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

Answer 1