Variable Expenses Fixed Expenses FALLON COMPANY Selling Expense Flexible Budget
ID: 2470503 • Letter: V
Question
Variable Expenses
Fixed Expenses
FALLON COMPANY
Selling Expense Flexible Budget Report
For the Month Ended March 31, 2017
Difference
Budget
Actual
Favorable
Unfavorable
Neither Favorable
nor Unfavorable
FALLON COMPANY
Selling Expense Flexible Budget Report
For the Month Ended March 31, 2017
Difference
Budget
Actual
Favorable
Unfavorable
Neither Favorable
nor Unfavorable
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(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
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
$
$
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
$
$
$
FavorableUnfavorableNeither Favorable nor Unfavorable
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
$
$
$
FavorableUnfavorableNeither 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
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
$
$
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
$
$
$
FavorableUnfavorableNeither Favorable nor Unfavorable
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
AdvertisingDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelVariable Costs
$
$
$
FavorableUnfavorableNeither Favorable nor Unfavorable
Explanation / Answer
Cost Formula Flexible Budget for 980 litres blood Actual result for 980 litres blood Revenue /Spending Variance (Flexible Budget - Actual) Favourable/Unfaourable $ $ $ Sales 173700 173700 0 N Expenses: Variable expenses: Sales commissions 6% of sales 10422 11272 -850 U Advertising 6% of advertising 10422 10552 -130 U Travel 5% of sales 8685 8685 0 N Delivery 2% of sales 3474 3534 -60 U Fixed Expenses: 0 N Sales salaries 34900 34900 34900 0 N Depreciation 7500 7500 7500 0 N Insurance 1600 1600 1600 0 N Total cost 77003 78043 -1040 U Profit 96697 95657 1040 U Cost Formula Flexible Budget for 980 litres blood Actual result for 980 litres blood Revenue /Spending Variance (Flexible Budget - Actual) Favourable/Unfaourable $ $ $ Sales 181000 181000 0 N Expenses: Variable expenses: Sales commissions 6% of sales 10860 11272 -412 U Advertising 6% of advertising 10860 10552 308 F Travel 5% of sales 9050 8685 365 F Delivery 2% of sales 3620 3534 86 F Fixed Expenses: 0 N Sales salaries 34900 34900 34900 0 N Depreciation 7500 7500 7500 0 N Insurance 1600 1600 1600 0 N Total cost 78390 78043 347 F Profit 102610 102957 -347 F
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