Question
E10-5 Prepare flexible manufacturing overhead budget
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.
Instructions
Prepare a monthly flexible budget for each $10,000 increment of sales within the relevant range for the year ending December 31, 2017.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .
FALLON COMPANY
Monthly Selling Expense Flexible Budget
For the Year 2017
Activity level Sales Revenue $170,000 $180,000 $190,000 $200,000 Variable expenses Sales commissions (6%) Choose...$10,200 $12,000 $11,400 7,2007,600$10,800 8,0006,800 Choose...$10,200 $12,000 $11,400 7,2007,600$10,800 8,0006,800 Choose...$10,200 $12,000 $11,400 7,2007,600$10,800 8,0006,800 Choose...$10,200 $12,000 $11,400 7,2007,600$10,800 8,0006,800 Advertising (4%) Choose...$10,200 $12,000 $11,400 7,2007,600$10,800 8,0006,800 Choose...$10,200 $12,000 $11,400 7,2007,600$10,800 8,0006,800 Choose...$10,200 $12,000 $11,400 7,2007,600$10,800 8,0006,800 Choose...$10,200 $12,000 $11,400 7,2007,600$10,800 8,0006,800 Traveling (3%) Choose...4,0005,7003,4003,6005,1003,8005,4006,000 Choose...4,0005,7003,4003,6005,1003,8005,4006,000 Choose...4,0005,7003,4003,6005,1003,8005,4006,000 Choose...4,0005,7003,4003,6005,1003,8005,4006,000 Delivery (2%) Choose...4,0005,7003,4003,6005,1003,8005,4006,000 Choose...4,0005,7003,4003,6005,1003,8005,4006,000 Choose...4,0005,7003,4003,6005,1003,8005,4006,000 Choose...4,0005,7003,4003,6005,1003,8005,4006,000 Total variable expenses (15%) Choose...28,50030,00027,00025,500 Choose...28,50030,00027,00025,500 Choose...28,50030,00027,00025,500 Choose...28,50030,00027,00025,500 Fixed expenses Sales salaries Choose...$68,500 7,00035,00043,0001,000 Choose...7,0001,00043,000$70,000 35,000 Choose...35,0007,00043,000$71,500 1,000 Choose...$73,000 35,0007,0001,00043,000 Depreciation Choose...$68,500 7,00035,00043,0001,000 Choose...7,0001,00043,000$70,000 35,000 Choose...35,0007,00043,000$71,500 1,000 Choose...$73,000 35,0007,0001,00043,000 Insurance Choose...$68,500 7,00035,00043,0001,000 Choose...7,0001,00043,000$70,000 35,000 Choose...35,0007,00043,000$71,500 1,000 Choose...$73,000 35,0007,0001,00043,000 Total fixed expenses Choose...$68,500 7,00035,00043,0001,000 Choose...7,0001,00043,000$70,000 35,000 Choose...35,0007,00043,000$71,500 1,000 Choose...$73,000 35,0007,0001,00043,000 Total expenses Choose...$68,500 7,00035,00043,0001,000 Choose...7,0001,00043,000$70,000 35,000 Choose...35,0007,00043,000$71,500 1,000 Choose...$73,000 35,0007,0001,00043,000
Explanation / Answer
Activity level Sales revenue 170,000 180,000 190,000 200,000 Variable expenses: Sales commission (6%) 10200 10800 11400 12000 Advertising (4%) 6800 7200 7600 8000 Travelling (3%) 5100 5400 5700 6000 Delivery (2%) 3400 3600 3800 4000 total Variable expense (15%) 25500 27000 28500 30000 Fixed expense Sales salaries 35,000 35,000 35,000 35,000 Depreciation 7,000 7,000 7,000 7,000 insurance 1,000 1,000 1,000 1,000 total fixed expense 43,000 43,000 43,000 43,000 total expense 68,500 70,000 71,500 73,000
