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The actual selling expenses incurred in March 2017 by Fallon Company are as follows.
Variable Expenses Fixed Expenses
Sales commissions $14,178 Sales salaries $35,000
Advertising 10,036 Depreciation 7,200
Travel 8,305 Insurance 1,300
Delivery 3,382
(a) Prepare a flexible budget performance report for March, assuming that March sales were $166,100. Variable costs and their percentage relationship to sales are sales commissions 8%, advertising 6%, traveling 5%, and delivery 2%. Fixed selling expenses will consist of sales salaries $35,000, Depreciation on delivery equipment $7,200, and insurance on delivery equipment $1,300. (List variable costs before fixed costs.)

Respuesta :

Answer:

The flexible budget performance report gives Net Income of $87,719 for the month of march 2017.

Explanation:

                              March 2017

Sales Revenue          $166,100  

Less: Variable Expenses

Sales Commission   $13,288        (=Sales Revenue x 8%)

Advertising                   $9,966        (=Sales Revenue x 6%)

Travel                          $8,305        (=Sales Revenue x 5%)

Delivery                          $3,322        (=Sales Revenue x 2%)

Contribution                    $131,219    (=Sales Revenue - Variable Expenses)

Less: Fixed Expenses

Sales Salaries          $35,000  

Depreciation                   $7,200  

Insurance                   $1,300  

 

Net Income                   $87,719    (=Contribution - Fixed Expenses)

*Excel file is attached for your reference.

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