The actual selling expenses incurred in March 2020 by Fallon Company are as follows.

Variable Expenses

Fixed Expenses

Sales commissions $11,180 Sales salaries $35,500

Advertising 10,530 Depreciation 7,400

Travel 6,920 Insurance 1,100

Delivery 3,580

(a) Prepare a flexible budget performance report for March, assuming that March sales were $173,000. Variable costs and their percentage relationship to sales are sales commissions 6%, advertising 6%, traveling 4%, and delivery 2%. Fixed selling expenses will consist of sales salaries $35,500, Depreciation on delivery equipment $7,400, and insurance on delivery equipment $1,100. (List variable costs before fixed costs.)

FALLON COMPANY
Selling Expense Flexible Budget Report
For the Month Ended March 31, 2020

Difference

Budget

Actual

Favorable
Unfavorable
Neither Favorable
nor Unfavorable

Select an opening flexible budget report item                                                          AdvertisingDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelVariable Expenses

$Enter a dollar amount

$Enter a dollar amount

Select an opening name for section one                                                          AdvertisingDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelVariable Expenses

Select a flexible budget report item                                                          AdvertisingDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelVariable Expenses

$Enter a dollar amount

$Enter a dollar amount

$Enter the difference

Select an option                                                          FavorableUnfavorableNeither Favorable nor Unfavorable

Select a flexible budget report item                                                          AdvertisingDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelVariable Expenses

Enter a dollar amount

Enter a dollar amount

Enter the difference

Select an option                                                          FavorableUnfavorableNeither Favorable nor Unfavorable

Select a flexible budget report item                                                          AdvertisingDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelVariable Expenses

Enter a dollar amount

Enter a dollar amount

Enter the difference

Select an option                                                          FavorableUnfavorableNeither Favorable nor Unfavorable

Select a flexible budget report item                                                          AdvertisingDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelVariable Expenses

Enter a dollar amount

Enter a dollar amount

Enter the difference

Select an option                                                          FavorableUnfavorableNeither Favorable nor Unfavorable

Select a closing name for section one

Enter a total amount for section one

Enter a total amount for section one

Enter the difference

Select an option                                                          FavorableUnfavorableNeither Favorable nor Unfavorable

Select an opening name for section two

Select a flexible budget report item

Enter a dollar amount

Enter a dollar amount

Enter the difference

Select an option                                                          FavorableUnfavorableNeither Favorable nor Unfavorable

Select a flexible budget report item

Enter a dollar amount

Enter a dollar amount

Enter the difference

Select an option                                                          FavorableUnfavorableNeither Favorable nor Unfavorable

Select a flexible budget report item

Enter a dollar amount

Enter a dollar amount

Enter the difference

Select an option                                                          FavorableUnfavorableNeither Favorable nor Unfavorable

Select a closing name for section two

Enter a total amount for section two

Enter a total amount for section two

Enter the difference

Select an option                                                          FavorableUnfavorableNeither Favorable nor Unfavorable

Select a closing flexible budget report item

$Enter a total dollar amount

$Enter a total dollar amount

$Enter the difference

Select an option                                                          FavorableUnfavorableNeither Favorable nor Unfavorable

Question

The actual selling expenses incurred in March 2020 by Fallon Company are as follows.

Variable Expenses	Fixed Expenses
Sales commissions	$11,180	Sales salaries	$35,500
Advertising	10,530	Depreciation	7,400
Travel	6,920	Insurance	1,100
Delivery	3,580

(a) Prepare a flexible budget performance report for March, assuming that March sales were $173,000. Variable costs and their percentage relationship to sales are sales commissions 6%, advertising 6%, traveling 4%, and delivery 2%. Fixed selling expenses will consist of sales salaries $35,500, Depreciation on delivery equipment $7,400, and insurance on delivery equipment $1,100. (List variable costs before fixed costs.)

FALLON COMPANY Selling Expense Flexible Budget Report For the Month Ended March 31, 2020
			Difference
	Budget	Actual	Favorable Unfavorable Neither Favorable nor Unfavorable
Select an opening flexible budget report item AdvertisingDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelVariable Expenses	$Enter a dollar amount	$Enter a dollar amount
Select an opening name for section one AdvertisingDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelVariable Expenses
Select a flexible budget report item AdvertisingDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelVariable Expenses	$Enter a dollar amount	$Enter a dollar amount	$Enter the difference	Select an option FavorableUnfavorableNeither Favorable nor Unfavorable
Select a flexible budget report item AdvertisingDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelVariable Expenses	Enter a dollar amount	Enter a dollar amount	Enter the difference	Select an option FavorableUnfavorableNeither Favorable nor Unfavorable
Select a flexible budget report item AdvertisingDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelVariable Expenses	Enter a dollar amount	Enter a dollar amount	Enter the difference	Select an option FavorableUnfavorableNeither Favorable nor Unfavorable
Select a flexible budget report item AdvertisingDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelVariable Expenses	Enter a dollar amount	Enter a dollar amount	Enter the difference	Select an option FavorableUnfavorableNeither Favorable nor Unfavorable
Select a closing name for section one	Enter a total amount for section one	Enter a total amount for section one	Enter the difference	Select an option FavorableUnfavorableNeither Favorable nor Unfavorable
Select an opening name for section two
Select a flexible budget report item	Enter a dollar amount	Enter a dollar amount	Enter the difference	Select an option FavorableUnfavorableNeither Favorable nor Unfavorable
Select a flexible budget report item	Enter a dollar amount	Enter a dollar amount	Enter the difference	Select an option FavorableUnfavorableNeither Favorable nor Unfavorable
Select a flexible budget report item	Enter a dollar amount	Enter a dollar amount	Enter the difference	Select an option FavorableUnfavorableNeither Favorable nor Unfavorable
Select a closing name for section two	Enter a total amount for section two	Enter a total amount for section two	Enter the difference	Select an option FavorableUnfavorableNeither Favorable nor Unfavorable
Select a closing flexible budget report item	$Enter a total dollar amount	$Enter a total dollar amount	$Enter the difference	Select an option FavorableUnfavorableNeither Favorable nor Unfavorable

Accepted Answer

Flexible budget is dynamic and changes with the change in the volume of activity.