DeWitt Company uses flexible budgets to control its selling expenses. Monthly sa

Question

DeWitt Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $174,100 to $216,400. Variable costs and their percentage relationship to sales are sales commissions 7%, advertising 6%, traveling 4%, and delivery 1%. Fixed selling expenses will consist of sales salaries $35,203, depreciation on delivery equipment $7,488, and insurance on delivery equipment $1,830. Prepare a monthly flexible budget for each $14,100 increment of sales within the relevant range for the year ending December 31, 2014. (List variable costs before fixed costs.) DEWITT COMPANY Monthly Selling Expense Flexible Budget For the Year 2014

Explanation / Answer

Please find below the required table:

This is calculated as:

Advertising = 6% of sales

Delivery = 1% of sales

Sales Commissions = 7% of sales

Travelling = 4% of sales

Hope this helped ! Let me know in case of any queries.

Sales 174,100 188,200 202,300 216,400 Advertising 10,446 11,292 12,138 12,984 Delivery 1,741 1,882 2,023 2,164 Sales Commissions 12,187 13,174 14,161 15,148 Travelling 6,964 7,528 8,092 8,656 Total Variable Expenses 31,338 33,876 36,414 38,952

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