Question

Anderson Enterprises manufactures tires for the Formula 1 motor racing circuit. For August 2017, it budgeted to manufacture and sell 3,700 tires at a variable cost of $70 per tire and total fixed costs of $53,000. The budgeted selling price was $1 13 per tire. Actual results in August 2017 were 3,500 tires manufactured and sold at a selling price of $1 14 per tire. The actual total variable costs were $273,000, and the actual total fixed costs were $49,500 Read the requirements 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 "O" in the appropriate field. If the variance is zero, do not select a label.) Flexible-Budget Flexible Actual Sales-Volume Static -X Variances Requirements Results Budget Variances Budget Units sold Revenues 1. Prepare a performance report that uses a flexible budget and a static budget Variable costs 2. Comment on the results in requirement 1 Contribution margin Fixed costs Print Done Operating income

Requirement 2. Comment on the results in requirement 1. Please help with choosing the comments based on the answer above

The total static-budget variance in operating income is $				(number)		There is a(n) (Favorable/Unfavorable)		total flexible-budget
variance and a(n) (Favorable/Unfavorable)			sales-volume variance. The sales-volume variance arises solely because actual units
manufactured and sold were (less/more)			than the budgeted 3,700 units. The flexible-budget variance in operating income is due
primarily to the (increase/decrease)			in unit variable costs.

Answer 1

A C E F H I D Flexible budget Variances G Sales Volume Variance Actual Results Flexible Budget Static Budget Units Sold Revenues Variable Costs Contribution Margin Fixed Costs Operating Income 3,500 $ 399,000 $ 272,000 $ 127,000 $ 49,500 $ 77,500 3,500 3500 F $ 395,500 27000 U $ 245,000 -23500 U $ 150,500 -3500 F $ 53,000 -20000 U $ 97,500 -19100 U $ 13000 U $ -32100 U $ - 3500 F $ -28600 U $ 3,700 418,100 259,000 159,100 53,000 106,100

Here is the formula version

А Sales Volume Variance Actual Results Flexible budget Variances Flexible Budget Static Budget =C4-F4 Units Sold Revenues Variable Costs Contribution Margin Fixed Costs Operating Income 3500 =C3*114 272000 =C4-C5 49500 =C6-C7 3500 =14/13*F3 =F3*70 =F4-F5 53000 =F6-F7 =C5-F5 =C6-F6 =C7-F7 =C8-F8 U =C4-14 C5-15 =C6-16 =C7-17 =C8-18 3700 =13*113 =13*70 =14-15 53000 =16-17 U U U F U F U

The total static-budget variance in operating income is $				28,600		There is an Unfavorable		total flexible-budget
variance and an Unfavorable			sales-volume variance. The sales-volume variance arises solely because actual units
manufactured and sold were less		3,500	than the budgeted 3,700 units. The flexible-budget variance in operating income is due
primarily to the increase			in unit variable costs.