Question

- Juver Enterprises manufactures tires for the Formula 1 motor racing circuit For August 2017, it budgeted to manufacture and sell 3,000 tires at a variable cost of $73 per tire and total food costs of 57,000. The budgeted seling price was $115 per tire. Actual results in August 2017 were 2,900 tires manufactured and sold at a seling price of $117 per tire. The actual total variable costs were 232,000, and the actual total and costs were $53.000 ead the requirements Actual Flexible-Budget Flexible Results Variances Budget Units sold 2.900 Requirements Ceveres s 330,300 232.000 ariable costs Contribution margin 107,300 1. Prepare a performance report that uses a fexble budget and a static budget 53000 2. Comment on the results in requirement1 xed costs 54,300 perating income Print Done oose from any list or enter any number in the input fields and then click Check Answe Clear Al Check Answer parts remaining

Answer 1

	Actual result	Flexible-Budget variances	.	Flexible Budget
Units sold	2900			2900
Sales revenue	$               3,39,300	$                    5,800	Favorable	$                  3,33,500
Variable costs	$               2,32,000	$                  20,300	Unfavorable	$                  2,11,700
Contribution Margin	$               1,07,300	$                  14,500	Unfavorable	$                  1,21,800
Fixed cost	$                  53,000	$                    4,000	Favorable	$                     57,000
Operating Income	$                  54,300	$                  10,500	Unfavorable	$                     64,800

Working note:

	Bugeted	Flexible Budget	Actual per unit	Actuals	Variance
	(i)	(ii)[2,900 Units*(i)]	(iii)	(iv)[2900 Units*(iii)]	(ii)-(iv)
Sales revenue	$     115	$                3,33,500	$                 117	$                  3,39,300	$   5,800	Favorable
Variable costs	$       73	$                2,11,700	$                   80	$                  2,32,000	$ 20,300	Unfavorable
Contribution Margin	$       42	$                1,21,800	$                   37	$                  1,07,300	$ 14,500	Unfavorable
Fixed cost		$                   57,000		$                     53,000	$   4,000	Favorable
Operating Income		$                   64,800		$                     54,300	$ 10,500	Unfavorable

Flexible budget determined is as follows:

Variable Cost: Actual Production * Budgeted cost per unit

Sales : Actual Production * Budgeted selling price per unit

Fixed cost is a fixed in a nature irrespective of production units.

Note:Flexible budget is calculated on the basis on actual unit sold .