Brabham Enterprises manufactures tires for the Formula I motor racing circuit. For August 2020, it budgeted to manufacture and sell 3,000 tires at a variable cost of $73 per tire and total fixed costsof $57,000. The budgeted selling price was $111 per tire. Actual results in August 2020 were 2,700 tires manufactured and sold at a selling price of $113 per tire. The actual total variable costs were$218,700, and the actual total fixed costs were $53,500.Read the requirementsRequirement 1. Prepare a performance report with a flexible budget and a static budgetBegin 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 10 balance, make sureto enter "0" in the appropriate field. If the variance is zero, do not select a label)Units soldRevenuesVariable costsContribution marginFixed costsOperating incomeActualResults atreroRequirements1. Prepare a performance report with a flexible budget and a static budget.2. Comment on the results in requirement 1.PrintDone-Xfavorable o

Flexible budget is a adjusted budget which is prepared end of a accounting period based on actual…

Answered: 1. Prepare a performance report with a…

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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

Brabham Enterprises manufactures tires for the Formula I motor racing circuit. For August 2020, it budgeted to manufacture and sell 3,000 tires at a variable cost of $73 per tire and total fixed costs
of $57,000. The budgeted selling price was $111 per tire. Actual results in August 2020 were 2,700 tires manufactured and sold at a selling price of $113 per tire. The actual total variable costs were
$218,700, and the actual total fixed costs were $53,500.
Read the requirements
Requirement 1. Prepare a performance report with 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 10 balance, make sure
to enter "0" in the appropriate field. If the variance is zero, do not select a label)
Units sold
Revenues
Variable costs
Contribution margin
Fixed costs
Operating income
Actual
Results

at
re
ro
Requirements
1. Prepare a performance report with a flexible budget and a static budget.
2. Comment on the results in requirement 1.
Print
Done
-
X
favorable o

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Distinguish among a budget, a performance report, and a variance. Question content area bottom Part 1 A. A budget measures the differences between a performance report and a variance; a performance report compares actual results with the budget; and a variance is a quantitative expression of a plan of action. B. A budget compares the performance report with variances; a performance report measures the differences between budget and actual; and a variance is a quantitative expression of a plan of action. C. A budget compares actual results with the performance report; a performance report is a quantitative expression of a plan of action; and a variance measures the differences between budget and actual. D. A budget is a quantitative expression of a plan of action; a performance report compares actual results with the budget; and a variance measures the differences between budget and actual.
Static budgets are often used:A.By production departmentsB.By administrative departmentsC.By responsibility centersD.For capital projects
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Explain the relationship between a simple budget and a flexible budget.
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