Question

Exercise 22-6

The actual selling expenses incurred in March 2017 by Fallon Company are as follows.

Variable Expenses				Fixed Expenses
Sales commissions		$10,880		Sales salaries		$35,400
Advertising		10,040		Depreciation		7,000
Travel		6,660		Insurance		2,000
Delivery		3,410

(a) Prepare a flexible budget performance report for March, assuming that March sales were $166,500. Variable costs and their percentage relationship to sales are sales commissions 6%, advertising 6%, traveling 4%, and delivery 2%. Fixed selling expenses will consist of sales salaries $35,400, Depreciation on delivery equipment $7,000, and insurance on delivery equipment $2,000. (List variable costs before fixed costs.)

Exercise 22-6 The actual selling expenses incurred in March 2017 by Fallon Company are as follows. Variable Expenses Sales commissions $10,880 Advertising 10,040 Travel 6,660 Delivery 3,410 Fixed Expenses Sales salaries $35,400 Depreciation 7,000 Insurance 2,000 (a) Prepare a flexible budget performance report for March, assuming that March sales were $166,500. Variable costs and their percentage relationship to sales are sales commissions 6%, advertising 6%, traveling 4%, and delivery 2%. Fixed selling expenses will consist of sales salaries $35,400, Depreciation on delivery equipment $7,000, and insurance on delivery equipment $2,000. (List variable costs before fixed costs.) FALLON COMPANY Selling Expense Flexible Budget Report For the Month Ended March 31, 2017 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual

Answer 1

Answer-a)-

FALLON COMPANY
Selling Expense Flexible Budget Report
For the month ended March 31,2017
Particulars	Flexible Budget	Actual Costs	Differences	Remark
	$	$	$
Variable Expenses:-
Sales commissions 6%	$166500*6%=$9990	10880	-890	Unfavorable
Advertising 6%	$166500*6%=$9990	10040	-50	Unfavorable
Travel 4%	$166500*4%=$6660	6660	0	None
Delivery 2%	$166500*2%=$3330	3410	-80	Unfavorable
Total Variable expenses (a)	29970	30990	-1020	Unfavorable
Fixed Expenses:-
Sales salaries	35400	35400	0	None
Depreciation	7000	7000	0	None
Insurance	2000	2000	0	None
Total Fixed expenses (b)	44400	44400	0	None
Total Expenses (c=a+b)	74370	75390	-1020	Unfavorable

b)-

FALLON COMPANY
Selling Expense Flexible Budget Report
For the month ended March 31,2017
Particulars	Flexible Budget	Actual Costs	Differences	Remark
	$	$	$
Variable Expenses:-
Sales commissions 6%	$175100*6%=$10506	10880	-374	Unfavorable
Advertising 6%	$175100*6%=$10506	10040	466	Favorable
Travel 4%	$175100*4%=$7004	6660	344	Favorable
Delivery 2%	$175100*2%=$3502	3410	92	Favorable
Total Variable expenses (a)	31518	30990	528	Favorable
Fixed Expenses:-
Sales salaries	35400	35400	0	None
Depreciation	7000	7000	0	None
Insurance	2000	2000	0	None
Total Fixed expenses (b)	44400	44400	0	None
Total Expenses (c=a+b)	75918	75390	528	Favorable