Homework: chapter 7 HW Score: 3.26 of 25 pts E7-21 (similar to) Save 1 of 6 (5 c

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Homework: chapter 7 HW Score: 3.26 of 25 pts E7-21 (similar to) Save 1 of 6 (5 complete) Hw Score: 37.27%, 52.17 of 140 pts Question Help Connolly Enterprises manufactures tires for the Fomula 1 motor racing circuit. For August 2017, it budgeted to manufacture and sell 3,200 tires at a variable cost of $78 per tire and total foxed costs of $53,000. The budgeted selling price was $107 per tire. Actual results in August 2017 were 2,900 tires manufactured and sold at a selling price of $109 per tire. The actual total variable costs were $249,400, and the actual total fixed costs were S49,000. 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 S0 balance, make sure to enter "O in the appropriate field. If the variance is zero, do not select a label.) Actual Flexible-Budget Flexible Results Variances Budget 2,900 $ 316,100 249,400 66,700 49,000 S 17,700 Units sold Requirements Variable costs Contribution margin Fixed costs Operating income 1. 2. Prepare a performance report that uses a flexible budget and a static budget. Comment on the result s in requirement 1 Print Done Choose from any list or enter any number in the input fields and then click Check Answer. Clear All Check Answer remaining

Explanation / Answer

1) Prepare flexible budget variance :

2) Company's overall performance is not favorable because ending net operating income is unfavorable because variable cost gives highest unfavorable variance

Actual results Flexible budget variance Flexible budget Unit sold 2900 2900 Revenue 316100 5800 F 310300 Variable cost 249400 23200 U 226200 Contribution margin 66700 17400 U 84100 Fixed cost 49000 4000 F 53000 Net operating income 17700 13400 U 31100

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