Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

Exercise 26

Four Flags is a retail department store. The following cost-volume-relationships were used in developing a flexible budget for the company for the current year:
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 follow s:
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.