7-16 Flexible budget. Brabham Enterprises manufactures tires for the Formula I motor racing circuit. For August...

Transcribed Image Text:

7-16 Flexible budget. Brabham Enterprises manufactures tires for the Formula I motor racing circuit. For August 2012, it budgeted to manufacture and sell 3,000 tires at a variable cost of $74 per tire and total fixed costs of $54,000. The budgeted selling price was $110 per tire. Actual results in August 2012 were 2,800 tires manufactured and sold at a selling price of $112 per tire. The actual total variable costs were $229,600, and the actual total fixed costs were $50,000. 2. Prepare a performance report (akin to Exhibit 7-2, p. 231) that uses a flexible budget and a static budget. 3. Comment on the results in requirement 1. 7-16 Flexible budget. Brabham Enterprises manufactures tires for the Formula I motor racing circuit. For August 2012, it budgeted to manufacture and sell 3,000 tires at a variable cost of $74 per tire and total fixed costs of $54,000. The budgeted selling price was $110 per tire. Actual results in August 2012 were 2,800 tires manufactured and sold at a selling price of $112 per tire. The actual total variable costs were $229,600, and the actual total fixed costs were $50,000. 2. Prepare a performance report (akin to Exhibit 7-2, p. 231) that uses a flexible budget and a static budget. 3. Comment on the results in requirement 1.

Answer rating: 100% (QA)

Answer To prepare a performance report using a flexible budget and a static budget we need to compare the actual results with both budgets 1 Flexible ... View the full answer