Suppose that for 2006 a particular store budgeted revenue of $330,000, a 10% increase over the current revenue of $300,000. The actions listed in Exhibit 1-2 resulted in six new budgeted products and a total advetising budget of $30,000. Actual results were
New Drinks Added 7
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Advertising $32,500
Revenues $328,000
1. Prepare a performance report for these items using the format of Exhibit 1-3 page 13.
2. Net Income results were not available until several months after the store implemented the plan. The net income results were disappointing to management because profits declined even thoughrevenues increased. Why? Because costs increased by more than revenues. List some factors that might have caused costs to increase so much and that management may not have considered when they formulated the store’s plan
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