Question

Fallon Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $167,300 to $209,300. Variable costs and their percentage relationship to sales are sales commissions 7%, advertising 6%, travel 4%, and delivery 1%. Fixed selling expenses will consist of sales salaries $34,900, depreciation on delivery equipment $7,100, and insurance on delivery equipment $1,900. Prepare a monthly selling expense flexible budget for each $14,000 increment of sales within the relevant range for the year ending December 31, 2020. (List variable costs before fixed costs.) FALLON COMPANY Monthly Selling Expense Flexible Budget For the Year 2020 $ $ $ $ $ $ $ $ $ $ $ $ Click if you would like to Show Work for this question:

Answer 1

	Activity
	level
	Sales revenue			167,300	181,300	195,300	209,300
	Variable expenses:
	Sales commission (7%)			11711	12691	13671	14651
	Advertising (6%)			10038	10878	11718	12558
	Travelling (4%)			6692	7252	7812	8372
	Delivery (1%)			1673	1813	1953	2093
	total Variable expense (18%)			30114	32634	35154	37674
	Fixed expense
	Sales salaries			34,900	34,900	34,900	34,900
	Depreciation			7,100	7,100	7,100	7,100
	insurance			1,900	1,900	1,900	1,900
	total fixed expense			43,900	43,900	43,900	43,900
	total expense			74,014	76,534	79,054	81,574