Exercise 22-6 The actual selling expenses incurred in March 2017 by Fallon Compa

Question

Exercise 22-6 The actual selling expenses incurred in March 2017 by Fallon Company are as follows. Variable Expenses Fixed Expenses Sales commissions $14,684 Sales salaries $34,900 Advertising 10,458 Depreciation 7,300 Travel 8,615 Insurance 1,400 Delivery 3,546 (a) Prepare a flexible budget performance report for March, assuming that March sales were $172,300. Variable costs and their percentage relationship to sales are sales commissions 8%, advertising 6%, traveling 5%, and delivery 2%. Fixed selling expenses will consist of sales salaries $34,900, Depreciation on delivery equipment $7,300, and insurance on delivery equipment $1,400. (List variable costs before fixed costs.)

Explanation / Answer

a) Flexible budget for the month of March as follows:

1.Sales. =$172,300

Less: Variable cost

a)sales commission =13,784

b) Advertising =10,338

c) Traveling = 8,615

d) Delivery = 3,446

________

$36,183

Less : Fixed expenses

a) Sales salaries. =$34,900

b) Depreciation. = 7,300

c) Insurance = 1,400

______

43,600

________

Profit $92,517  

________

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