Exercise 24-5 Fallon Company uses flexible budgets to control its selling expens
ID: 2480271 • Letter: E
Question
Exercise 24-5
Fallon Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $170,000 to $200,000. Variable costs and their percentage relationship to sales are sales commissions 6%, advertising 4%, traveling 3%, and delivery 2%. Fixed selling expenses will consist of sales salaries $35,000, depreciation on delivery equipment $7,000, and insurance on delivery equipment $1,000.
Prepare a monthly flexible budget for each $10,000 increment of sales within the relevant range for the year ending December 31, 2017. (List variable costs before fixed costs.)
FALLON COMPANY
Monthly Selling Expense Flexible Budget
For the Year 2017
FALLON COMPANY
Monthly Selling Expense Flexible Budget
For the Year 2017
$
$
$
$
AdvertisingActivity LevelDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelingVariable Costs AdvertisingActivity LevelDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelingVariable Costs$
$
$
$
AdvertisingActivity LevelDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelingVariable Costs AdvertisingActivity LevelDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelingVariable Costs AdvertisingActivity LevelDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelingVariable Costs AdvertisingActivity LevelDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelingVariable Costs AdvertisingActivity LevelDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelingVariable Costs AdvertisingActivity LevelDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelingVariable Costs AdvertisingActivity LevelDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelingVariable Costs AdvertisingActivity LevelDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelingVariable Costs AdvertisingActivity LevelDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelingVariable Costs AdvertisingActivity LevelDepreciationDeliveryFixed CostsInsuranceSalesSales CommissionsSales SalariesTotal CostsTotal Fixed CostsTotal Variable CostsTravelingVariable Costs$
$
$
$
Explanation / Answer
Answer:
Fallon Company Selling Expenses Flexible Budget For the Year 2017 Expected Sales $170,000 $180,000 $190,000 $200,000 Variable Selling Costs: Sales Commission (6% on Sales) $10,200 $10,800 $11,400 $12,000 Advertisement Costs (4% on Sales) $6,800 $7,200 $7,600 $8,000 Travelling Costs (3% on Sales) $5,100 $5,400 $5,700 $6,000 Delivery Cost (2% on Sales) $3,400 $3,600 $3,800 $4,000 Total Variable Costs $25,500 $27,000 $28,500 $30,000 Fixed Selling Costs: Sales Salaries $35,000 $35,000 $35,000 $35,000 Depreciation on Delivery Equipment $7,000 $7,000 $7,000 $7,000 Insurance on Delivery Equipment $1,000 $1,000 $1,000 $1,000 Total Fixed Costs $43,000 $43,000 $43,000 $43,000 Total Selling Expenses (Variable + Fixed Cost) $68,500 $70,000 $71,500 $73,000Related Questions
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