Preparing a Flexible Budget Performance Report
Cellular Technologies manufactures capacitors for cellular base stations and other communication
applications. The company's July 2016 flexible budget shows outputs levels of 7,500, 9,000, and 11,000
units. The static budget was based on expected sales of 9,000 units.
	Cellular Technologies
	Flexible Budget
	For the Month Ended July 31, 2016
		Budget Amounts per Units
	Units		7,500	9,000	11,000
	Sales Revenue	$25	$ 187,500	$ 225,000	$ 275,000
	Variable Expenses	13	97,500	117,000	143,000
	Contribution Margin		$ 90,000	$ 108,000	$ 132,000
	Fixed Expenses		56,000	56,000	56,000
	Operating Income		$ 34,000	$ 52,000	$ 76,000
The company sold 11,000 units during July. Its actual operating income was as follows:
	Cellular Technologies
	Flexible Budget
	For the Month Ended July 31, 2016
	Sales Revenue		$ 282,000
	Variable Expenses		148,000
	Contribution Margin		$ 134,000
	Fixed Expenses		57,500
	Operating Income		$ 76,500
REQUIREMENTS
1.)	Prepare a flexible budget performance report for July 2016.
2.)	What was the effect on Cellular's operating income of selling 2,000 units more than
	the static budget level of sales?
3.)	What is Cellular's static budget variance for operating income?
4.)	Explain why the flexible budget performance report provides more useful information to
	Cellular's managers that the simple static budget variance? What insights can Cellular's
	managers draw from this performance report?