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

1 Budget Actual Difference Sales 173100 173100 Variable costs: Sales commissions 13848 14688 840 Unfavorable Advertising 10386 10476 90 Unfavorable Traveling 6924 6924 0 Neither Favorable nor Unfavorable Delivery 3462 3552 90 Unfavorable Total Variable costs 34620 35640 1020 Unfavorable Fixed expenses: Sales salaries 34600 34600 0 Neither Favorable nor Unfavorable Depreciation 6600 6600 0 Neither Favorable nor Unfavorable Insurance 2000 2000 0 Neither Favorable nor Unfavorable Total Fixed expenses 43200 43200 0 Neither Favorable nor Unfavorable Total costs 77820 78840 1020 Unfavorable b Budget Actual Difference Sales 182100 182100 Variable costs: Sales commissions 14568 14688 120 Unfavorable Advertising 10926 10476 450 Favorable Traveling 7284 6924 360 Favorable Delivery 3642 3552 90 Favorable Total Variable costs 36420 35640 780 Favorable Fixed expenses: Sales salaries 34600 34600 0 Neither Favorable nor Unfavorable Depreciation 6600 6600 0 Neither Favorable nor Unfavorable Insurance 2000 2000 0 Neither Favorable nor Unfavorable Total Fixed expenses 43200 43200 0 Neither Favorable nor Unfavorable Total costs 79620 78840 780 Favorable

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