Surf Boards, Inc. had the following summarized results for the month ending July 30:
Assume that the budget was based on the sale of 104 surfboards at $500 each and the actual results reflect the sale of 104 surfboards. What is the most appropriate conclusion in the report to management?
If costs as a percentage of revenues had remained at the budgeted level, net income would be $985 above budget. Costs were 87.69% at $52,000 in sales; at $60,000, costs should be $52,615 not $53,600 for a difference of $985.