Beech company produced and sold 105,000 units of its product in may. for the level of production achieved in may, the budgeted amounts were: sales, $1,300,000; variable costs, $750,000; and fixed costs, $300,000. the following actual financial results are available for may. actual sales (105,000 units) $ 1,275,000 variable costs 712,500 fixed costs 300,000 prepare a flexible budget performance report for may.

Solution :

It is given that Fizzo and Pop Hop sells orange soda. Fizzo advertises about his drinks while Pop Hop does not advertises.

According to the matrix provided we can conclude that :

-- If Fizzo wishes to advertise about his soda drinks, he will earn a profit of 8 million dollar and if Pop Hop do advertises and a 15 million dollar if Pop Hop does not advertises.

-- If Fizzo does not advertise, it will earn profit of about 2 million dollar if Pop Hop advertises and 9 million dollar if Pop Hop does not advertises.

-- When Pop Hop wished to advertise , Fizzo will make a higher profit if he chooses to advertise.

-- When Pop Hop do not advertise, Fizzo will make a higher profit when it chooses to advertise.

And if both the firms acts independently and they start off not advertising, then --- both firms will advertise as both of them will earn highest profits each.

If both the firms collude and both firms start off not advertising, the strategies they will end up is that both the firms will not advertise as the joint profit will be maximized.