Brabham Enterprises manufactures tires for the Formula I motor racing circuit. For August 2013, 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 2013 were 2,800 tires manufactured and sold at a selling price of $112per tire. The actual total variable costs were $229,600, and the actual total fixed costs were $50,000.

REQUIRED

1. Prepare a performance report (akin to Exhibit 7-6, p. 252) that uses a flexible budget and a static budget.

2. Comment on the results in requirement 1.