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

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

Fixed Expenses

Sales salaries$34,900

Depreciation 6,600

Insurance1,300

Variable Expenses

Sales commissions$11,340

Advertising 12,280

Travel 6,960

Delivery 3,600


(a) Prepare a flexible budget performance report for March, assuming that March sales were $174,000. Variable costs and their percentage relationship to sales are sales commissions 6%, advertising 7%, traveling 4%, and delivery 2%. Fixed selling expenses will consist of sales salaries $34,900, Depreciation on delivery equipment $6,600, and insurance on delivery equipment $1,300. (List variable costs before fixed costs.)

(b) Prepare a flexible budget performance report, assuming that March sales were $181,900. (List variable costs before fixed costs.)

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Answer #1

a)

Fallon Company
Selling Expense Flexible Budget Report
For the Month Ended March 31, 2020
Budget Actual Difference
Sales $174000 $174000 0 NONE
Less: Variable costs:
Sales commissions (174000*6%)= 10440 11340 (10440-11340)= 900 U
Advertising (174000*7%)= 12180 12280 (12180-12280)= 100 U
Travel (174000*4%)= 6960 6960 0 NONE
Delivery (174000*2%)= 3480 3600 (3480-3600)= 120 U
Total variable costs $33060 $34180 (33060-34180)= 1120 U
Less: Fixed costs
Sales salaries 34900 34900 0 NONE
Depreciation 6600 6600 0 NONE
Insurance 1300 1300 0 NONE
Total fixed costs $42800 $42800 0 NONE
Total costs (33060+42800)= $75860 (34180+42800)= 76980 (75860-76980)= 1120 U

b)

Fallon Company
Selling Expense Flexible Budget Report
For the Month Ended March 31, 2020
Budget Actual Difference
Sales $181900 $181900 0 NONE
Less: Variable costs:
Sales commissions (181900*6%)= 10914 11340 (10914-11340)= 426 U
Advertising (181900*7%)= 12733 12280 (12733-12280)= 453 F
Travel (181900*4%)= 7276 6960 (7276-6960)= 316 F
Delivery (181900*2%)= 3638 3600 (3638-3600)= 38 F
Total variable costs $34561 $34180 (34561-34180)= 381 F
Less: Fixed costs
Sales salaries 34900 34900 0 NONE
Depreciation 6600 6600 0 NONE
Insurance 1300 1300 0 NONE
Total fixed costs $42800 $42800 0 NONE
Total costs (34561+42800)= $77361 (34180+42800)= $76980 (77361-76980)= 381 F
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