Concept explainers
Flexible budget. Sweeney Enterprises manufactures tires for the Formula I motor racing circuit. For August 2017, it budgeted to manufacture and sell 3,600 tires at a variable cost of $71 per tire and total fixed costs of $55,000. The budgeted selling price was $114 per tire. Actual results in August 2017 were 3,500 tires manufactured and sold at a selling price of $116 per tire. The actual total variable costs were $280,000, and the actual total fixed costs were $51,000.
- 1. Prepare a performance report (akin to Figure 7-2, page 254) that uses a flexible budget and a static budget.
Required
- 2. Comment on the results in requirement 1.
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