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Flexible budget Brabham enterprises manufactures tires for the Formula l motor racing circuit. For August 2009, it budgeted to manufacture and sell 3000 tires at a variable cost of $ 74 per tire and total fixed cost of $54,000. The budgeted selling price was $110 per tire. Actual results in August 2009 were 2,800 tires manufactured and sold at a selling price of $112 per tire. The actual total variable costs were $229,600, and actual total fixed costs were $50,000.
1. Prepare a performance report (akin to Exhibit 7-2) that uses a flexible budget and a static budget.
2. Comment on the results in requirement 1.
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