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E7-16 (Flexible Budget) Brabham Enterprises manufactures tires for
the Formula I motor racing circuit. For August 2014, 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 2014 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.
1) Prepare a performance report that uses a flexible budget and a
static budget.
2) Comment on the results in requirement 1.