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Question 1: Flexible budget. Brabham Enterprises manufactures tires for the Formula I motor racing circuit. For August 2020, it budgeted to manufacture and sell 2,500 tires at a variable cost of $67 per tire and total fixed costs of $74,000. The budgeted selling price was $120 per tire. Actual results in August 2020 were 5,200 tires manufactured and sold at a selling price of $105 per tire. The actual total variable costs were $260,000, and the actual total fixed costs were $65,000 1. Prepare a performance report with a flexible budget and a static budget. 2. Comment on the results in requirement 1.
Question 2: What is the difference between static budget and the flexible budget?
Question 3: Write 2 possible causes of a favourable material rate variance?
Question 4: Write 2 possible causes for a unfavourable direct manufacturing labour efficiency variance?
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