Kluver Enterprises manufactures tires for the Formula I motor racing circuit. For August, it budgeted to manufacture and sell 3,800 tires at a variable cost of $74 per tire and total fixed costs of $66,500. The budgeted selling price was $130 per tire. Actual results in August were 3,600 tires manufactured and sold at a selling price of $132 per tire. The actual total variable costs were $288,000, and the actual total fixed costs were $65,000. Required 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, and then complete the flexible budget columns and the static budget columns. Label each variance as favourable or unfavourable. (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. Use parentheses or a minus sign when entering an operating loss.) Actual Results Flexible-Budget Variances Units sold Revenues Variable costs Contribution margin Fixed costs Operating income Requirement 2. Comment on the results in requirement 1. Flexible Budget The total static-budget variance in operating income is $ manufactured and sold were Sales-Volume Variances Static Budget . There is total flexible-budget variance and than the budgeted units. The flexible-budget variance in operating income is due primarily to the sales-volume variance. The sales-volume variance arises solely because actual units in unit variable costs.
Kluver Enterprises manufactures tires for the Formula I motor racing circuit. For August, it budgeted to manufacture and sell 3,800 tires at a variable cost of $74 per tire and total fixed costs of $66,500. The budgeted selling price was $130 per tire. Actual results in August were 3,600 tires manufactured and sold at a selling price of $132 per tire. The actual total variable costs were $288,000, and the actual total fixed costs were $65,000. Required 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, and then complete the flexible budget columns and the static budget columns. Label each variance as favourable or unfavourable. (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. Use parentheses or a minus sign when entering an operating loss.) Actual Results Flexible-Budget Variances Units sold Revenues Variable costs Contribution margin Fixed costs Operating income Requirement 2. Comment on the results in requirement 1. Flexible Budget The total static-budget variance in operating income is $ manufactured and sold were Sales-Volume Variances Static Budget . There is total flexible-budget variance and than the budgeted units. The flexible-budget variance in operating income is due primarily to the sales-volume variance. The sales-volume variance arises solely because actual units in unit variable costs.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Kluver Enterprises manufactures tires for the Formula I motor racing circuit. For August, it budgeted to manufacture and sell 3,800 tires at a variable cost of $74 per tire and total fixed costs of $66,500. The budgeted selling price was
$130 per tire. Actual results in August were 3,600 tires manufactured and sold at a selling price of $132 per tire. The actual total variable costs were $288,000, and the actual total fixed costs were $65,000.
Required
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, and then complete the flexible budget columns and the static budget columns. Label each variance as favourable or unfavourable. (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. Use parentheses or a minus sign when entering an operating loss.)
Units sold
Revenues
Variable costs
Contribution margin
Fixed costs
Actual
Results
Flexible-Budget
Variances
Operating income
Requirement 2. Comment on the results in requirement 1.
Flexible
Budget
Sales-Volume
Variances
Static
Budget
There is
total flexible-budget variance and
The total static-budget variance in operating income is $
manufactured and sold were
than the budgeted units. The flexible-budget variance in operating income is due primarily to the
sales-volume variance. The sales-volume variance arises solely because actual units
in unit variable costs.
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