Hello, I need help to do this ex. DeWitt Company uses flexible budgets to contro

ID: 2463090 • Letter: H

Question

Hello, I need help to do this ex.

DeWitt Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $171,300 to $207,600. Variable costs and their percentage relationship to sales are sales commissions 8%, advertising 5%, traveling 3%, and delivery 2%. Fixed selling expenses will consist of sales salaries $34,819, depreciation on delivery equipment $7,015, and insurance on delivery equipment $1,644. Prepare a monthly flexible budget for each $12,100 increment of sales within the relevant range for the year ending December 31, 2014. (List variable costs before fixed costs.)

Explanation / Answer

DEWITT COMPANY

Monthly Selling Expense Flexible Budget

For the Year 2014

Particulars

Sales

171,300

183,400

195,500

207,600

Less: Variable costs

Sales commission

13,704

14,672

15,640

16,608

Advertising

8,565

9,170

9,775

10,380

Travelling

5,139

5,502

5,865

6,228

Delivery

3,426

3,668

3,910

4,152

Contribution

140,466

150,388

160,310

170,232

Less: Fixed sales salaries

34,819

Less: Depreciation

7,015

Less:Insurance

1,644

Profit

96,988

106,910

116,832

126,754