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 follows some cost estimates for the Houston store.
T&P Fashions |
|||
Flexible Budget Information |
|||
Expense |
Fixed |
Variable |
|
Cost of sales |
$210,000 |
40% |
$740,000 |
Management |
27,000 |
12% |
186,000 |
Shop assistants |
162,000 |
8% |
268,000 |
Rent |
13,200 |
5% |
54,450 |
Utilities |
34,800 |
34,800 |
|
$447,000 |
$1,283,250 |
Additional information
Actual results
T&P Fashions |
|
Actual Results from Operations |
|
Revenues |
$1,325,000 |
Cost of sales |
790,000 |
Management |
208,000 |
Shop assistants |
230,000 |
Rent |
58,200 |
Utilities |
31,000 |
Operating profit |
$7,800 |
Required:
Computations (use Excel)
Memo (use Word)
Write a 4- or 5-paragraph memo to the division manager explaining the flexible budget variances; how to interpret the information; and what action, if any to take. Comment on the 5% marketing proposal too. Start with an introduction and end with a recommendation. Each of the four or five paragraphs should have a heading.
Short Essay (use Word) Start with an introduction and end with a summary or conclusion. Use headings.
Each submission should include two files: (1) An Excel file; and (2) A Word document. The Word document shows the memo first and short essay last. Assume a knowledgeable business audience and use required format and length. Individuals in business are busy and want information presented in an organized and concise manner.
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