Simple Sally Sandwiches has provided you with their Income Statement (Budgeted vs. Actual) for the month ended July 31. Sally is very happy that her net income is considerably up compared to her budget. Simple Sally Sandwiches Income Statement (Actual vs Budget) For the month ended July 31 Budget Actual Customers (orders) 1,500 2,500 Revenue Sandwich Sales 8,500 12,500 Drink Sales 4,400 6,000 Soup Sales 1,500 2,000 Total Revenue 14,400 20,500 Operating Expenses Variable Sandwich costs 3,400 6,125 Variable Drink costs 528 1,200 Variable Soup Costs 1,050 1,140 Property Tax (fixed) 500 500 Variable Cutlery / containers 1,440 1,600 Direct labour for the month 1,500 1,750 Rent expense 1,200 1,200 Utilities (fixed cost) 400 400 Office Expense (fixed) 250 250 Total Operating Expenses 10,268 14,165 Operating Income 4,132 6,335 tax (20%) 826 1,267 Net Income 3,306 5,068 

Required: 

• Prepare a Contribution Format Income statement. Be sure to include 

o Budget and Actual amounts 

o Calculate the variances between the Actual and Budget 

• Should Sally be happy with the performance of the company for the month? 

o Discuss with Sally why she should or shouldn’t be happy 

o Hint- To support your answer, create a flexible budget from your newly created Contribution Format income statement (the full answer will have 2 income statements- A CM Income statement and a Flexible Budget Income Statement).

Answer rating: 100% (QA)

Simple Sally Sandwiches Income Statement Actual vs Budget For the month ended July 31 Sales Budget A... View the full answer