At the start of 2015, the New Orleans Fine Food Company budgeted before-tax income as follows:
Sales $550,000
Less:
Material cost $100,000
Labor cost $220,000
Owner's salary $65,000
Rent $55,000
Depreciation $45,000
Utilities $22,000 $507,000
Income before taxes $443,000
Actual before tax income for 2015 was:
Sales $660,000
Less:
Material cost $130,000
Labor cost $285,000
Owner's salary $65,750
Rent $55,000
Depreciation $45,200
Utilities $21,000 $601,950
Income before taxes $58,050
Florence Roden, the owner of the company, is pleased that sales were much higher than planned, but she also is concerned that expenses were $94,950 higher than the amounts she budgeted. Should she be concerned with the level of actual expenses? Prepare a performance report that will help her focus on areas needing attention.