Snells is a retail department store. The following cost-volume relationships were used in develop- ing a flexible budget for the 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 0.041 Delivery expense 111,000 0.008 Credit and collection expense 72,000 0.002 Administrative expense 531,000 0.003 Totals $1,260,000 $0.758 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 as follows. $10,500,000 Net sales 6,180,000 Cost of goods sold 1,020,000 Selling and promotion expense 420,000 Building occupancy expense 594,000 Buying expense 183,000 Delivery expense 90,000 Credit and collection expense 564,000 Administrative expense a. 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 multiple-step income statement, ending with operating income. Include separate columns for (1) flexible budget amounts, (2) actual amounts, and (3) any amount over (under) budget. Use the cost- volume relationships given in the problem to compute the flexible budget amounts. Instructions
Snells is a retail department store. The following cost-volume relationships were used in develop- ing a flexible budget for the 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 0.041 Delivery expense 111,000 0.008 Credit and collection expense 72,000 0.002 Administrative expense 531,000 0.003 Totals $1,260,000 $0.758 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 as follows. $10,500,000 Net sales 6,180,000 Cost of goods sold 1,020,000 Selling and promotion expense 420,000 Building occupancy expense 594,000 Buying expense 183,000 Delivery expense 90,000 Credit and collection expense 564,000 Administrative expense a. 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 multiple-step income statement, ending with operating income. Include separate columns for (1) flexible budget amounts, (2) actual amounts, and (3) any amount over (under) budget. Use the cost- volume relationships given in the problem to compute the flexible budget amounts. Instructions
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
23.7A
Transcribed Image Text:1029
b. Write a statement evaluating the company's performance in relation to the plan reflected in the
flexible budget.
ronorts in nlanning and controlling
Transcribed Image Text:23-4, LO23-5,
Snells is a retail department store. The following cost-volume relationships were used in develop-
ing a flexible budget for the company for the current year.
23.7A
nd Using a
dget
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
0.041
Delivery expense
111,000
0.008
Credit and collection expense
72,000
0.002
Administrative expense .
531,000
0.003
Totals
$1,260,000
$0.758
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 as follows.
$10,500,000
Net sales
6,180,000
Cost of goods sold ....
1,020,000
Selling and promotion expense
420,000
Building occupancy expense
594,000
Buying expense
183,000
Delivery expense
90,000
Credit and collection expense
564,000
Administrative expense.
a. 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 multiple-step
income statement, ending with operating income. Include separate columns for (1) flexible
budget amounts, (2) actual amounts, and (3) any amount over (under) budget. Use the cost-
volume relationships given in the problem to compute the flexible budget amounts.
Instructions
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