PROBLEM 23.7A Preparing and Using a Flexible Budget QLO23-2, L023-4, L023-5, L023-6 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. a Variable Yearly Fixed Expenses per Expenses Sales Dollar $0.600 0.082 Cost of merchandise sold Selling and promotion expense Building occupancy expense Buying expense Delivery expense Credit and collection expense Administrative expense Totals $ 210,000 186,000 150,000 111,000 72,000 531,000 $1,260,000 0.022 0.041 0.008 0.002 0.003 $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. Net sales Cost of goods sold Selling and promotion expense Building occupancy expense Buying expense Delivery expense Credit and collection expense Administrative expense $10,500,000 6,180,000 1,020,000 420,000 594,000 183,000 90,000 564,000 Instructions 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. b. Write a statement evaluating the company's performance in relation to the plan reflected in the flexible budget. Page 1037