Question

The actual selling expenses incurred in March 2020 by Fallon Company are as follows. Variable Expenses...

The actual selling expenses incurred in March 2020 by Fallon Company are as follows.

Variable Expenses

Fixed Expenses

Sales commissions $11,272 Sales salaries $34,900
Advertising 10,552 Depreciation 7,500
Travel 8,685 Insurance 1,600
Delivery 3,534


(a) Prepare a flexible budget performance report for March, assuming that March sales were $173,700. Variable costs and their percentage relationship to sales are sales commissions 6%, advertising 6%, traveling 5%, and delivery 2%. Fixed selling expenses will consist of sales salaries $34,900, Depreciation on delivery equipment $7,500, and insurance on delivery equipment $1,600. (List variable costs before fixed costs.)

(b) Prepare a flexible budget performance report, assuming that March sales were $181,000. (List variable costs before fixed costs.)

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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% $173700*6%=$10422 11272 -850 Unfavorable
Advertising 6% $173700*6%=$10422 10552 -130 Unfavorable
Travel 5% $173700*5%=$8685 8685 0 None
Delivery 2% $173700*2%=$3474 3534 -60 Unfavorable
Total Variable expenses (a) 33003 34043 -1040 Unfavorable
Fixed Expenses:-
Sales salaries 34900 34900 0 None
Depreciation 7500 7500 0 None
Insurance 1600 1600 0 None
Total Fixed expenses (b) 44000 44000 0 None
Total Expenses (c=a+b) 77003 78043 -1040 Unfavorable

b)-

FALLON COMPANY
Selling Expense Flexible Budget Report
For the month ended March 31,2017
Particulars Flexible Budget Actual Costs Differences Remark
$ $ $
Variable Expesnes:-
Sales commissions 6% $181000*6%=$10860 11272 -412 Unfavorable
Advertising 6% $181000*6%=$10860 10552 308 Favorable
Travel 5% $181000*5%=$9050 8685 365 Favorable
Delivery 2% $181000*2%=$3620 3534 86 Favorable
Total Variable expenses (a) 34390 34043 347 Favorable
Fixed Expenses:-
Sales salaries 34900 34900 0 None
Depreciation 7500 7500 0 None
Insurance 1600 1600 0 None
Total Fixed expenses (b) 44000 44000 0 None
Total Expenses (c=a+b) 78390 78043 347 Favorable
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