The actual selling expenses incurred in March 2017 by Fallon Company are as foll
ID: 2394832 • Letter: T
Question
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 $168,300. Variable costs and their percentage relationship to sales are sales commissions 6%, advertising 7%, traveling 5%, and delivery 2%. Fixed selling expenses will consist of sales salaries $35,100, Depreciation on delivery equipment $7,300, and insurance on delivery equipment $1,900. (List variable costs before fixed costs.)
(b) Prepare a flexible budget performance report, assuming that March sales were $177,000. (List variable costs before fixed costs.)
Variable Expenses
Fixed Expenses
Sales commissions $10,978 Sales salaries $35,100 Advertising 11,911 Depreciation 7,300 Travel 8,415 Insurance 1,900 Delivery 3,446Explanation / Answer
(a) Flexible Budget for March (value of Sales 168300)
Sales
$ 168,300.00
Less-Variable Cost
Sales Commission
$ 10,098.00
Advertising expense
$ 11,781.00
Travelling
$ 8,415.00
Delivery expense
$ 3,366.00
Total Variable Cost
$ 33,660.00
Contribution margin
$ 134,640.00
Fixed expenses
Sales salaries
$ 35,100.00
Depreciation
$ 7,300.00
Insurance
$ 1,900.00
Total Fixed Cost
$ 44,300.00
Net Income
$ 90,340.00
(b) Flexible Budget for March (value of Sales 177000)
Sales
$ 177,000.00
Less-Variable Cost
Sales Commission
$ 10,620.00
Advertising expense
$ 12,390.00
Travelling
$ 8,850.00
Delivery expense
$ 3,540.00
Total Variable Cost
$ 35,400.00
Contribution margin
$ 141,600.00
Fixed expenses
Sales salaries
$ 35,100.00
Depreciation
$ 7,300.00
Insurance
$ 1,900.00
Total Fixed Cost
$ 44,300.00
Net Income
$ 97,300.00
(a) Flexible Budget for March (value of Sales 168300)
Sales
$ 168,300.00
Less-Variable Cost
Sales Commission
$ 10,098.00
Advertising expense
$ 11,781.00
Travelling
$ 8,415.00
Delivery expense
$ 3,366.00
Total Variable Cost
$ 33,660.00
Contribution margin
$ 134,640.00
Fixed expenses
Sales salaries
$ 35,100.00
Depreciation
$ 7,300.00
Insurance
$ 1,900.00
Total Fixed Cost
$ 44,300.00
Net Income
$ 90,340.00
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