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

Question

Fallon Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $167,300 to $209,300. 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 $34,900, depreciation on delivery equipment $7,100, and insurance on delivery equipment $1,900.

Prepare a monthly flexible budget for each $14,000 increment of sales within the relevant range for the year ending December 31, 2017.

( Choices for titles of expenses - Advertising, Activity Level, Depreciation, Delivery, Fixed Costs, Insurance, Sales, Sales Commissions, Sales Salaries, Total Costs, Total Fixed Costs, Total Variable Costs, Traveling, Variable Costs)

Explanation / Answer

Fallon Company

Flexible Selling Budget

Activity Level

Sales

$167300

$181300

$195300

Variable Expenses

Sales Commission

$11711

$12691

$13671

Advertising

$10038

$10878

$11718

Travelling

$6692

$7252

$7812

Delivery

$1673

$1813

$1953

Total Variable Costs

$30114

$32634

$35154

Fixed Expenses

Sales Salaries

$34900

$34900

$34900

Depreciation on Delivery Equipment

$7100

$7100

$7100

Insurance on Delivery Equipment

$1900

$1900

$1900

Total fixed Expenses

$43900

$43900

$43900

Total Costs

$74014

$76534

$79054

Fallon Company

Flexible Selling Budget

Activity Level

Sales

$167300

$181300

$195300

Variable Expenses

Sales Commission

$11711

$12691

$13671

Advertising

$10038

$10878

$11718

Travelling

$6692

$7252

$7812

Delivery

$1673

$1813

$1953

Total Variable Costs

$30114

$32634

$35154

Fixed Expenses

Sales Salaries

$34900

$34900

$34900

Depreciation on Delivery Equipment

$7100

$7100

$7100

Insurance on Delivery Equipment

$1900

$1900

$1900

Total fixed Expenses

$43900

$43900

$43900

Total Costs

$74014

$76534

$79054

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