Kluver Enterprises manufactures tires for Formula 1 racing. In August 2017, it budgeted to produce 3,700 tires at $74 per tire in variable costs and $52,500 in fixed costs, planning to sell tires at $116 each. Actual production was 3,500 tires sold at $120 each, with $287,000 in variable costs and $50,000 in fixed costs. A performance report is required comparing actuals to the flexible and static budgets, labeling variances as favorable or unfavorable. Commentary is also needed on the budget variances.

1. Kluver Enterprises manufactures tires for the Formula 1 motor racing circuit. For August 2017,
it budgeted to manufacture and sell 3,700 tires at a variable cost of $74 per tire and total fixed
costs of $52,500. The budgeted selling price was $116 per tire. Actual results in August 2017
were 3,500 tires manufactured and sold at a selling price of $120 per tire. The actual total
variable costs were $287,000, and the actual total fixed costs were $50,000. Read the
requirements. Requirement 1. Prepare a performance report that uses a flexible budget and a
static budget. Begin with the actual results, then complete the flexible budget columns and the
static budget columns. Label each variance as favorable or unfavorable. (For variances with a $0
balance, make sure to enter " 0 " in the appropriate field. If the variance is zero
Kluver Enterprises manufactures tires for the Formula 1 motor racing circuit. For August 2017, it
budgeted to manufacture and sell 3,700 tires at a variable cost of $74 per tire and total fixed costs
of $52,500. The budgeted selling price was $116 per tire. Actual results in August 2017 were
3,500 tires manufactured and sold at a selling price of $120 per tire. The actual total variable
costs were $287,000, and the actual total fixed costs were $50,000. Read the requirements.
Requirement 2. Comment on the results in requirement 1. The total static-budget variance in
operating income is $ There is a(n) total flexible-budget sales-volume variance. The sales-
volume variance arises solely because actual variance and a(n) units manufactured and sold than
the budgeted 3,700 units. The flexible-budget variance in operating income is were due primarily
to the in unit variable costs.