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 variableexpenses 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
Write a statement evaluating the company's performance in relation to the plan reflected in the flexible budget.