T&P Fashion Shops

T&P Fashion Shops is a new chain that operates 10 stores in major malls throughout the United States. Each store manager is responsible for preparing a flexible budget for the store. T&P headquarters accumulates and analyzes the information for each store and in the aggregate.

Below is the forecast (budgeted income statement) for the Houston store showing the breakdown of fixed and variable expenses in columns two through four. The last column shows the actual results.

T&P Fashions - Houston Store Breakdown of Expenses (Forecast) Forecast Revenues $1 ,400,000 Cost of Sales 790,000 Gross Prot $610,000 Management 1 82,000 Shop assistants 258,000 Rent 23,200 Utilities 34,800 Misc. expenses 24,500 Total expenses $522,500 Net income 33;; ,500 Fixed 1 54,700 1 54,800 1 8 ,560 34,800 12,250 Variable 790,000 27 ,300 103,200 4,640 12,250 Actual $1 260,000 161M911 $500,000 1 82,000 262,000 22,000 3 1,000 22.1110 $526430 $(26,000)