Question

Question 4 -/1 ew Policies arrent Attempt in Progress The actual selling expenses incurred in March 2017 by Fallon Company are as follows. Variable Expenses Fixed Expenses Sales commissions $14,688 Sales salaries $34,600 Advertising 10,476 Depreciation 6,600 Travel 6,924 Insurance 2,000 Delivery 3,552 (a) Prepare a flexible budget performance report for March, assuming that March sales were $173,100. Variable costs and their percentage relationship to sales are sales commissions 8 % , advertising 6 % , traveling 4 % , and delivery 2 %. Fixed selling expenses will consist of sales salaries $34,600, Depreciation on delivery equipment $6,600, and insurance on delivery equipment $2,000. (List voriable costs before fixed costs.) FALLON COMPANY Selling Expense Flexible Budget Report For the Month Ended March 31, 2017 Difference Favorable Unfavorable Neither Favorable Budget Actual nor Unfavorable

Answer 1

Part a. FALLON COMPANY Selling Expense Flexible Budget Report For the Month Ended March 31, 2017 Budget Actual 173,100 173,100 Difference 840 90 Sales Variable Costs Sales Commission Advertising Travel Delivery Total Variable Costs Fixed Costs Sales Salaries Depreciation Insurance Total Fixed Costs Total Costs 13,848 10,386 6,924 3,462 34,620 14,688 10,476 6,924 3,552 35,640 Unfavorable Unfavorable Neither Favorable Nor Unfavorable Unfavorable Unfavorable 1,090 34,600 6,600 2,000 43,200 77,820 34,600 6,600 2,000 43,200 78,840 Neither Favorable Nor Unfavorable Neither Favorable Nor Unfavorable Neither Favorable Nor Unfavorable Neither Favorable Nor Unfavorable Unfavorable 1,020

Part b. FALLON COMPANY Selling Expense Flexible Budget Report For the Month Ended March 31, 2017 Budget Actual 182,100 182,100 Difference Sales Variable Costs Sales Commission Advertising Travel Delivery Total Variable Costs Fixed Costs Sales Salaries Depreciation Insurance Total Fixed Costs Total Costs 14,568 10,926 7,284 3,642 36,420 14,688 10,476 6,924 3,552 35,640 120 450 360 Unfavorable Favorable Favorable Favorable Favorable 35,100 7,300 1,900 44,300 80,720 34,600 6,600 2,000 43,200 78,840 500 700 100 1,100 1,880 Favorable Favorable Unfavorable Favorable Unfavorable