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Snells is a retail department store. The following cost volume relationships were used in developing 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 | ||||
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| Totals | $ | 1,260,000 | $ | 0.758 | ||
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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: |
| Net sales | $ | 10,500,000 |
| Cost of goods sold | 6,180,000 | |
| Selling and promotion expense | 1,020,000 | |
| Building occupancy expense | 420,000 | |
| Buying expense | 594,000 | |
| Delivery expense | 183,000 | |
| Credit and collection expense | 90,000 | |
| Administrative expense | 564,000 | |
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| Instructions |
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Prepare a schedule comparing the actual results with flexible budget amounts developed for the actual sales volume of $10,500,000. Organize your schedule as a partial multiple step income statement, ending with operating income. Include separate columns for (1) flexible budget amounts, (2) actual amounts, and (3) any amount over (under) budget. Use the cost volume relationships given in the problem to compute the flexible budget amounts. (Leave no cells blank be certain to enter “0” wherever required.Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.) |
| SNELLS Comparison of Budgeted and Actual Revenue and Expenses For the Year Ended December 31, 20__ |
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| Flexible Budget | Actual | Over (or Under) Budget | |
| (Click to select) Net sales Cost of goods sold Operating expenses Credit sales Net purchase | $ | $ | $ |
| (Click to select) Salaries expenses Direct material Cost of goods sold Net sales Dividends payable | |||
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| (Click to select) Gross profit on purchase Gross profit on sales | $ | $ | $ |
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| Operating expenses: | |||
| (Click to select) Delivery Selling and promotion Building occupancy Buying Administrative | $ | $ | $ |
| (Click to select) Buying Building occupancy Credit and collection Inventories Delivery | |||
| (Click to select) Accounts payble Buying Direct labor Delivery Adminstrative | |||
| (Click to select) Delivery Credit and collection Adminstrative Buying Building occupancy | |||
| (Click to select) Buying Credit and collection Adminstrative Administrative Building | |||
| (Click to select) Administrative Depreciation expenses Buying Accounts payble Building | |||
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| Total operating expenses | $ | $ | $ |
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| Operating income | $ | $ | $ |