Brabham Enterprises manufactures tires for the Formula I motor racing circuit. For
August 2018, 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 2018 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.
a) Prepare a performance report that uses a flexible budget and a static
budget.
b) Comment on the results in requirement a.