Hello, I am working on the homework below, but I am unsure of how to solve it. P

Question

Hello, I am working on the homework below, but I am unsure of how to solve it. Please help me in solving the homework below.

1. The actual selling expenses incurred in March 2017 by Fallon Company are as follows.

Variable Expenses

Fixed Expenses

(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.)

FALLON COMPANY
Selling Expense Flexible Budget Report
For the Month Ended March 31, 2017

Difference

Budget

Actual

Favorable
Unfavorable
Neither Favorable
nor Unfavorable

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

FALLON COMPANY
Selling Expense Flexible Budget Report
For the Month Ended March 31, 2017

Difference

Budget

Actual

Favorable
Unfavorable
Neither Favorable
nor Unfavorable

2. Gundy Company expects to produce 1,242,000 units of Product XX in 2017. Monthly production is expected to range from 72,700 to 109,700 units. Budgeted variable manufacturing costs per unit are: direct materials $4, direct labor $7, and overhead $10. Budgeted fixed manufacturing costs per unit for depreciation are $4 and for supervision are $3.

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

Explanation / Answer

a) Actual Flexible budget variance Flexible budget Sales 173700 173700 Variable expense Sales commission 11272 850 U 10422 Advertising 10552 130 U 10422 Travel 8685 0 8685 Delivery 3534 60 U 3474 Total variable cost 34043 1040 U 33003 Fixed cost Sales salaries 34900 0 34900 Depreciation 7500 7500 Insurance 1600 0 1600 Total fixed cost 44000 0 44000 Total cost 78043 1040 U 77003 b) Actual Flexible budget variance Flexible budget Sales 181000 181000 Variable expense Sales commission 11272 412 U 10860 Advertising 10552 308 F 10860 Travel 8685 365 F 9050 Delivery 3534 86 F 3620 Total variable cost 34043 347 F 34390 Fixed cost Sales salaries 34900 0 34900 Depreciation 7500 7500 Insurance 1600 0 1600 Total fixed cost 44000 0 44000 Total cost 78043 347 F 78390

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