Question

The actual selling expenses incurred in March 2017 by Fallon Company are as follows. Variable Expenses Sales commissions $12,741 Advertising 10,258 Travel 6,772 Delivery 3,446 Fixed Expenses Sales salaries $35,300 Depreciation 7,000 Insurance 1,800 (a) Prepare a flexible budget performance report for March, assuming that March sales were $169,300. Variable costs and their percentage relationship to sales are sales commissions 7%, advertising 6%, traveling 4%, and delivery 2%. Fixed selling expenses will consist of sales salaries $35,300, Depreciation on delivery equipment $7,000, and insurance on delivery equipment $1,800. (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

Fallon Company
Selling Expenses Flexible Budget
	Budget	Actual	Difference		Calculation for budget
	169300	169300
Variable Costs
Sales commissions	11851	12741	890	U	169300 * 7 %
Advertising	10158	10258	100	U	169300 * 6 %
Travelling	6772	6772	0		169300 * 4 %
Delivery	3386	3446	60	U	169300 * 2 %
Total VC	32167	33217	1050	U
Fixed OH Costs
Salaries	35300	35300	0
Depreciation	7000	7000	0
Insurance	1800	1800	0
Total FC	44100	44100	0	0
Total Budgted costs	76267	77317	1050	U
Fallon Company
Selling Expenses Flexible Budget
	Budget	Actual	Difference		Calculation for budget
	176800	169300
Variable Costs
Sales commissions	12376	12741	365	U	176800 * 7%
Advertising	10608	10258	-350	F	176800 * 6%
Travelling	7072	6772	-300	F	176800 * 4%
Delivery	3536	3446	-90	F	176800 * 2%
Total VC	33592	33217	-375	F
Fixed OH Costs
Salaries	35300	35300	0
Depreciation	7000	7000	0
Insurance	1800	1800	0
Total FC	44100	44100	0	0
Total Budgted costs	77692	77317	-375	U