The Skokomish Indian tribe sells fireworks for the 5 weeks preceding July 4. The tribe’s stand on Highway 101 near Hoodsport had budgeted sales of $80,000. Expected expenses were as follows:

Cost of fireworks … $ 40,000

Labor cost ………….     10,000

Other costs ………….     7,000

Total costs ……….    $ 57,000

Actual sales were $79,440, almost equal to the budget. The tribe spent $39,400 for fireworks, $13,100 for labor, and $6,900 for other costs.

1. Compute budgeted profit and actual profit.

2. Prepare a performance report to help identify those costs that were significantly different from the budget.

3. Suppose the tribe uses a management-by-exception rule. What costs deserve further explanation? Why?