Question

Cadiz Co. uses flexible budgets to control its selling expenses. Monthly sales are expected to be from $300,000 to $360,000. Variable costs and their percentage relationships to sales are: Sales commissions 5% Advertising 4% Traveling Delivery Fixed selling expenses consist of sales salaries $40,000 and depreciation on delivery equipment $10,000. The actual selling expenses incurred in February, 2019, by Cadiz are as follows: Sales commissions $17,200 Advertising 12,000 Traveling Delivery 23,700 2,400 Fixed selling expenses consist of sales salaries $41,500 and depreciation on delivery equipment $10,000. Prepare a flexible budget performance report, assuming that February sales were $330,000. (List variable expenses before fixed expenses.) CADIZ Co. Selling Expense Budget Report (Flexible) For the Month Ended February 28, 2019 Difference Favorable (F) Unfavorable (U) Not Applicable (NA) Budget Actual 24

Answer 1

Flexible Budget Performance Report for February Month

CADIZ Co.
Selling Expense Budget Report (Flexible)
For the Month Ended February 28,2019
			Difference
			Favorable (F)
			UnFavorable (U)
	Budget	Actual	Not Applicable (NA)
Sales	$330,000	$330,000
Variable Expenses
Sales Commissions	$16,500	$17,200	($700)	UnFavorable(U)
Advertising Expenses	$13,200	$12,000	$1200	Favorable(F)
Travelling Expenses	$23,100	$23,700	($600)	UnFavorable(U)
Delivery Expenses	$3,300	$2,400	$900	Favorable(F)
Total Variable Expenses	$56,100	$55,300	$800	Favorable(F)
Fixed Expenses
Fixed Sales Salaries	$40,000	$41,500	($1500)	UnFavorable(U)
Depreciation on Delivery Equipment	$10,000	$10,000	0	NA
Total Fixed Expenses	$50,000	$51,500	($1500)	UnFavorable(U)
Total Expenses	$106,100	$106,800
Profit (Sales - Total Expenses)	$223,900	$223,200	($700)	UnFavorable(U)