problems Group A 327h9 7 P8-25A Preparing a flexible budget performance report 1. Static Bud. Var. for Op. Inc. $20,800 F Pnpses Crne tor es Small Talk Technologies manufactures capacitors for cellular base stations and other communications applications. The company's July 2016 flexible budget shows output levels of 7,500, 9,000, and 11,000 units. The static budget was based on expected Learning Objective 1 sales of 9,000 units. SMALL TALK TECHNOLOGIES Flexible Budget For the Month Ended July 31, 2016 Budget Amount per Unit Units 11,000 7,500 9,000 Sales Revenue $ 24 $180,000 $216,000 $ 264,000 Variable Expenses 154,000 14 105,000 126,000 Contribution Margin 110,000 90,000 75,000 53,000 Fixed Expenses 53,000 53,000 $ 22,000 $ 37,000 $ 57,000 Operating Income 8 rnau fortest eses The company sold 11,000 units during July, and its actual operating income follows: ww. SMALL TALK TECHNOLOGIES Income Statement For the Month Ended July 31, 2016 S 271,000 159,200 Sales Revenue Variable Expenses 111,800 Contribution Margin 54,000 Fixed Expenses $ 57,800 Operating Income Requirements 1. Prepare a flexible budget performance report for July. (2.What was the effect on Small Talk's operating income of selling 2,000 units more than the static budget level of sales? 3. What is Small Talk's static budget variance for operating income? 4. Explain why the flexible budget performance report provides more useful inform tion to Small Talk's managers than the simple static budget variance. What insights can Small Talk's managers draw from this performance report? whot s the stcd Vaance 7 jectives 1, 3, 4 PR-264