The actual selling expenses incurred in March 2017 by Fallon Company are as foll

Question

The actual selling expenses incurred in March 2017 by Fallon Company are as follows.

Variable Expenses

Fixed Expenses

(a) Prepare a flexible budget performance report for March, assuming that March sales were $173,100. Variable costs and their percentage relationship to sales are sales commissions 8%, advertising 6%, traveling 4%, and delivery 2%. Fixed selling expenses will consist of sales salaries $34,600, Depreciation on delivery equipment $6,600, and insurance on delivery equipment $2,000. (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

(b) Prepare a flexible budget performance report, assuming that March sales were $182,100. (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

Variable Expenses

Fixed Expenses

Sales commissions $14,688 Sales salaries $34,600 Advertising 10,476 Depreciation 6,600 Travel 6,924 Insurance 2,000 Delivery 3,552

Explanation / Answer

Answer:- a)-

b)-

Fallon Company Flexible Budget Performance Report for March March sales $173100 Particulars Flexible Budget Actual Difference Remark $ $ $ Variable Expenses:- Sales Commissions 173100*8%=13848 14688 -840 Unfavourable Advertising 173100*6%=10386 10476 -90 Unfavourable Travel 173100*4%=6924 6924 0 Neither favourable nor unfavourable Delivery 173100*2%=3462 3552 -90 Unfavourable Fixed Expenses:- Sales salaries 34600 34600 0 Neither favourable nor unfavourable Depreciation 6600 6600 0 Neither favourable nor unfavourable Insurance 2000 2000 0 Neither favourable nor unfavourable

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