Reference no: EM131028695

CARDINAL CENTER - FLEXIBLE BUDGETING APPLICATION

Cardinal Center is a retail department store. The following cost-volume relationships were used in developing a flexible budget for he company for the current year:

	Yearly Fixed Expenses	Variable Expenses per Sales Dollar
Cost of merchandise sold		$0.600
Selling and promotion expense	$210,000	0.082
Building occupancy expense	186,000	0.022
Buying expense	150,000	0.040
Delivery expense	111,000	0.010
Credit and collection expense	72,000	0.002
Administrative expense	531,000	0.003
Total	$1,260,000	$0.759

Management expected to attain a sales level of $12 million during the current year. At the end of the year, the actual results achieved were:

Net sales	10,500,000
Cost of merchandise sold	6,180,000
Selling and promotion expense	1,020,000
Building occupancy expense	420,000
Buying expense	594,000
Delivery expense	183,000
Credit and collection expense	90,000
Administrative expense	564,000

Required:

Prepare a schedule comparing the actual results with flexible budget amounts developed for the actual sales of $10,500,000. Organize your schedule as a partial income statement, ending with operating income. Compare flexible budget amounts with actual amounts, as well as showing whether items were over (under) budget.