question archive Fallon Company uses flexible budgets to control its selling expenses
Fallon Company uses flexible budgets to control its selling expenses
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Fallon Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $171,100 to $205,300. Variable costs and their percentage relationship to sales are sales commissions 6%, advertising 5%, traveling 3%, and delivery 2%. Fixed selling expenses will consist of sales salaries $35,300, depreciation on delivery equipment $7,400, and insurance on delivery equipment $1,500.
Prepare a monthly flexible budget for each $11,400 increment of sales within the relevant range for the year ending December 31, 2017
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Answer:
Prepare a monthly flexible budget for each $11,400 increment of sales within the relevant range for the year ending December 31, 2017
| Sales | 171100 | 182500 | 193900 | 205300 |
| Variable cost | ||||
| Commission | 10266 | 10950 | 11634 | 12318 |
| Advertising | 8555 | 9125 | 9695 | 10265 |
| Travelling | 5133 | 5475 | 5817 | 6159 |
| Delivery | 3422 | 3650 | 3878 | 4106 |
| Total variable cost | 27376 | 29200 | 31024 | 32848 |
| Fixed cost | ||||
| Sales salaries | 35300 | 35300 | 35300 | 35300 |
| depreciation on delivery equipment | 7400 | 7400 | 7400 | 7400 |
| insurance on delivery equipment | 1500 | 1500 | 1500 | 1500 |
| Total fixed cost | 44200 | 44200 | 44200 | 44200 |
| Total cost | 71576 | 73400 | 75224 | 77048 |
