Reference no: EM13482554
A retail department store used the following cost-volume relationship were used in developing a flexible budget for the company for the currnet year:
yearly fixed expenses variable expenses per sales dollar
cost of merchandises old............................. $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................................. 72,000 0.002
administrative expense.................................. 531,000 0.003
totals...................................................... $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 by the company were:
net sales..............................................$10,500,00
cost of goods sold............................... 6,180,000
seliing and promoting expenses............ 1,020,000
building occupancy expenses............... 420,000
buying expenses................................. 594,000
delivery expense................................. 183,000
credit and collection expense............... 90,000
administrative expense........................ 564,000
Prepare a schedule comaoring the actual results with flexible budget amounts developed for the actual sales volume of $10,500,000. Organize your schedule as a partial multiple step income statement, ending with operating income. Include seperate columns for (1) flexible budget amounts, (2) actualamounts, and (3) any amount over/under budget. use the cost volume relationships given in the problem to compute the flexible budget amounts.