What is Network’s static budget variance? Explain why the income statement performance report…


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What is Network’s static budget variance? Explain why the income statement performance report… 1 answer below » Preparing an income statement performance report Network Technologies manufactures capacitors for cellular base stations and other communication applications. The company’s July 2012 flexible budget income statement shows output levels of 7,000, 8,500, and 10,500 units. The static budget was based on expected sales of 8,500 units. View complete question » NETWORK TECHNOLOGIES Flexible Budget Income Statement Month Ended July 31, 2012 Per Unit By Units (Capacitors) 7,000 8,500 10,500 Sales revenue $25 $   175,000 $& Preparing an income statement performance report Network Technologies manufactures capacitors for cellular base stations and other communication applications. The company’s July 2012 flexible budget income statement shows output levels of 7,000, 8,500, and 10,500 units. The static budget was based on expected sales of 8,500 units. NETWORK TECHNOLOGIES Flexible Budget Income Statement Month Ended July 31, 2012 Per Unit By Units (Capacitors) 7,000 8,500 10,500 Sales revenue $25 $   175,000 $    212,500 $    262,500 Variable expenses $13 91,000 110,500 136,500 Contribution margin $     84,000 $    102,000 $    126,000 Fixed expenses 56,000 56,000 56,000 Operating income $     28,000 $      46,000 $      70,000 The company sold 10,500 units during July, and its actual operating income was as follows: NETWORK TECHNOLOGIES Income Statement Month Ended July 31, 2012 Sales revenue $269,500 Variable expenses 141,500 Contribution margin $128,000 Fixed expenses 57,000 Operating income $71,000 Requirements 1. Prepare an income statement performance report for July 2012. 2. What was the effect on Network’s operating income of selling 2,000 units more than the static budget level of sales? 3. What is Network’s static budget variance? Explain why the income statement performance report provides more useful information to Network’s managers than the simple static budget variance. What insights can Network’s managers draw from this performance report? View less » Jul 18 2014 01:00 PM

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