Question

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

Variable Expenses Fixed Expenses Sales commissions $11,016 Sales salaries $35,000 Advertising 10,266 Depreciation 6,800 Travel 6,764 Insurance 1,700 Delivery 3,452

(a) Prepare a flexible budget performance report for March, assuming that March sales were $169,100. Variable costs and their percentage relationship to sales are sales commissions 6%, advertising 6%, traveling 4%, and delivery 2%. Fixed selling expenses will consist of sales salaries $35,000, Depreciation on delivery equipment $6,800, and insurance on delivery equipment $1,700. (List variable costs before fixed costs.)

(b) Prepare a flexible budget performance report, assuming that March sales were $177,300. (List variable costs before fixed costs.)

Answer 1

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%	$169100*6%=$10146	11016	-870	Unfavorable
Advertising 6%	$169100*6%=$10146	10266	-120	Unfavorable
Travel 4%	$169100*4%=$6764	6764	0	None
Delivery 2%	$169100*2%=$3382	3452	-70	Unfavorable
Total Variable expenses (a)	30438	31498	-1060	Unfavorable
Fixed Expenses:-
Sales salaries	35000	35000	0	None
Depreciation	6800	6800	0	None
Insurance	1700	1700	0	None
Total Fixed expenses (b)	43500	43500	0	None
Total Expenses (c=a+b)	73938	74998	-1060	Unfavorable

b)-

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%	$177300*6%=$10638	11016	-378	Unfavorable
Advertising 6%	$177300*6%=$10638	10266	372	Favorable
Travel 4%	$177300*4%=$7092	6764	328	Favorable
Delivery 2%	$177300*2%=$3546	3452	94	Favorable
Total Variable expenses (a)	31914	31498	416	Favorable
Fixed Expenses:-
Sales salaries	35000	35000	0	None
Depreciation	6800	6800	0	None
Insurance	1700	1700	0	None
Total Fixed expenses (b)	43500	43500	0	None
Total Expenses (c=a+b)	75414	74998	416	Favorable