Brabham Enterprises manufactures tires for the Formula 1 motor racing circuit. For August 2017, it budgeted to manufacture and sell 3,000 tires at a variable cost of $73 per tire and total fixed costs of $53,000.
The budgeted selling price was $115 per tire.
Actual results in August 2017 were 2,900 tires manufactured and sold at a selling price of $116 per tire.
The actual total variable costs were $229,100 and the actual total fixed costs were $50,000.
Required:
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.
Budget ActualVariances
Units sold
Revenues
Variable costs
Contribution margin
Fixed costs
Operating income
2. Comment on the results in #1.

You are chairman of the board of a successful technology firm. there is a nominal federal corporate tax rate of 35 percent, yet the effective tax rate of the typical corporation is about 12.6%. your firm has been clever with use of transfer pricing and keeping money abroad and has barely paid any taxes over the last 5 years; during this same time period, profits were $28 billion. one member of the board feels that it is un-american to use various accounting strategies in order to avoid paying taxes. others feel that these are legal loopholes and corporations have a fiduciary responsibility to minimize taxes. one board member quoted what the ceo of exxon once said: “i’m not a u.s. company and i don’t make decisions based on what’s good for the u.s.” what are the alternatives? what are your recommendations? why do you recommend this course of action?

Grant, inc., acquired 30% of south co.’s voting stock for $200,000 on january 2, year 1, and did not elect the fair value option. the price equaled the carrying amount and the fair value of the interest purchased in south’s net assets. grant’s 30% interest in south gave grant the ability to exercise significant influence over south’s operating and financial policies. during year 1, south earned $80,000 and paid dividends of $50,000. south reported earnings of $100,000 for the 6 months ended june 30, year 2, and $200,000 for the year ended december 31, year 2. on july 1, year 2, grant sold half of its stock in south for $150,000 cash. south paid dividends of $60,000 on october 1, year 2. before income taxes, what amount should grant include in its year 1 income statement as a result of the investment?

Determine if the following statements are true or false. an increase in government spending can crowd out private investment. an improvement in the budget balance increases the demand for financial capital. an increase in private consumption may crowd out private investment. lower interest rates can lead to private investment being crowded out. a trade balance in sur+ increases the supply of financial capital. if private savings is equal to private investment, then there is neither a budget sur+ nor a budget deficit.