Flexible budget performance report The Nashville Art Studio sells a wide variety of art supplies in a small resort community. The studio also offers art lessons in a variety of media for beginners and advanced students. About 60 percent of the studio's income is derived from the sale of art supplies and the remaining income is from art lessons. The volume of business depends a lot on the number of visitors to the resort community which in turn is affected significantly by the weather. Laura Kafer, the manager of the art studio, thinks that total sales of products and services will be $450,000 in 1993. Laura asked her accountant to prepare some cost data to help her plan and evaluate the performance of the art studio. The accountant prepared the following schedule of costs with variable costs expressed in amount per sales dollar.

During 1993 the Nashville Art Studio had sales of $485,000 resulting in a net income of $26,140. The studio experienced the following costs:

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Fixed Variable Costs per Costs Sales Dollars Supervisory salaries $52,500 $ - Wages and commissions. 45,000 Product expense Studio lease..... 36,000 Insurance 6,000 Depreciation, furniture and equip. 7,500 Maintenance 9,000 Teaching supplies 1,500 Office supplies. 750 .01 Employee benefits Utilities Miscellaneous 14,250 2,700 3,000 228885855 .10 .03 .02 .09 .03 .01 .01