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 merchandisesold........... $0.600
selling and promotionexpense....... $210,000 0.082
building occupancyexpense................186,000 0.022
buyingexpense...................................150,000 0.040
deliveryexpense..................................111,000 0.010
credit andcollection..............................72,000 0.002
administrativeexpense........................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 goodssold............................... 6,180,000
seliing and promoting expenses............ 1,020,000
building occupancyexpenses............... 420,000
buyingexpenses................................. 594,000
deliveryexpense................................. 183,000
credit and collectionexpense............... 90,000
administrativeexpense........................ 564,000
Prepare a schedule comparing the actual results with flexible budget amounts developed for the actual sales volume of$10,500,000. Organize your schedule as a partial multiplestep income statement, ending with operating income. Include seperate columns for (1) flexible budget amounts, (2) actual amounts, and (3) any amount over/under budget. use the costvolume relationships given in the problem to compute the flexiblebudget amounts.