Budget Project

Plan Actual Actual
Sales 1000000 1 1200000 1 800000 1

Variable Costs
Cost of Sales 600000 0.60 720000 0.60 480000 0.60
Commissions 50000 0.05 60000 0.05 40000 0.05
Delivery 10000 0.01 12000 0.01 8000 0.01
Bonus 50000 0.05 60000 0.05 40000 0.05
Total 710000 0.71 852000 0.71 568000 0.71
Contribution Margin 290000 0.29 348000 0.29 232000 0.29

Fixed Costs
Salaries-Management 20000 0.02 20000 0.017 20000 0.025
Salaries-Staff 6667 0.007 6667 0.006 6667 0.008
Advertising 40000 0.04 40000 0.033 40000 0.050
Rent 5000 0.005 5000 0.004 5000 0.006
Total 71667 0.07 71667 0.06 71667 0.09

Net Income 218333 0.22 276333 0.23 160333 0.20

Budget Project Questions

1. What are breakeven sales in dollars for the month of December?

2. What is the margin of safety in dollars?

3. What effect would a 3 percent decrease in variable cost have on planned contribution margin?

4. What effect would a 3 percent increase in selling price have on planned contribution margin?

5. What if any changes would you institute and why if you would, why not if you wouldn't?