Exercise 188

Cadiz Co. uses flexible budgets to control its selling expenses. Monthly sales are expected to be from $300,000 to $360,000. Variable costs and their percentage relationships to sales are:

Sales commissions		5%
Advertising		4%
Traveling		7%
Delivery		1%

Fixed selling expenses consist of sales salaries $40,000 and depreciation on delivery equipment $10,000. The actual selling expenses incurred in February, 2016, by Cadiz are as follows:

Sales commissions		$17,200
Advertising		12,000
Traveling		23,700
Delivery		2,400

Fixed selling expenses consist of sales salaries $41,500 and depreciation on delivery equipment $10,000. Prepare a flexible budget performance report, assuming that February sales were $330,000. (List variable expenses before fixed expenses.)

CADIZ CO. Selling Expense Budget Report (Flexible) For the Month Ended February 28, 2016
						Difference
		Budget		Actual		Favorable (F) Unfavorable (U) Not Applicable (NA)
InsuranceAdvertisingDeliverySalesActivity levelSales SalariesDepreciationTotal Fixed ExpensesTravelingVariable ExpensesTotal ExpensesSales CommissionsTotal Variable Expenses
Advertising Variable Expenses Activity level Total Variable Expenses Delivery Sales Commissions Traveling Depreciation Insurance Sales Sales Salaries Total Fixed Expenses Total Expenses		$		$
Variable ExpensesInsuranceSales CommissionsSales SalariesTravelingDepreciationAdvertisingTotal Variable ExpensesActivity levelDeliverySalesTotal Fixed ExpensesTotal Expenses
Total Expenses Depreciation Total Fixed Expenses Activity level Sales Variable Expenses Fixed Expenses Sales Commissions Advertising Delivery Traveling Total Variable Expenses Sales Salaries		$		$		$	NAUF
Total Variable Expenses Total Fixed Expenses Sales Activity level Total Expenses Sales Salaries Variable Expenses Advertising Depreciation Sales Commissions Traveling Delivery Fixed Expenses							FNAU
Total Expenses Variable Expenses Total Fixed Expenses Depreciation Sales Commissions Activity level Sales Delivery Advertising Total Variable Expenses Traveling Fixed Expenses Sales Salaries							NAUF
Total Variable Expenses Fixed Expenses Depreciation Sales Salaries Total Expenses Total Fixed Expenses Advertising Traveling Activity level Sales Variable Expenses Sales Commissions Delivery							UFNA
Sales Total Fixed Expenses Total Expenses Fixed Expenses Activity level Variable Expenses Sales Commissions Advertising Traveling Delivery Total Variable Expenses Sales Salaries Depreciation							UFNA
Total Variable ExpensesInsuranceDepreciationSalesTotal ExpensesFixed ExpensesDeliverySales CommissionsSales SalariesTotal Fixed ExpensesAdvertisingTravelingActivity level
Delivery Advertising Sales Total Variable Expenses Sales Salaries Sales Commissions Total Expenses Traveling Fixed Expenses Depreciation Total Fixed Expenses Activity level Variable Expenses							FNAU
Fixed ExpensesSalesActivity levelSales SalariesAdvertisingTotal Fixed ExpensesTravelingSales CommissionsDeliveryDepreciationTotal ExpensesTotal Variable ExpensesVariable Expenses							NAUF
Advertising Traveling Total Expenses Delivery Sales Salaries Depreciation Total Variable Expenses Total Fixed Expenses Activity level Variable Expenses Fixed Expenses Sales Sales Commissions							FUNA
AdvertisingTotal Variable ExpensesTotal Fixed ExpensesSalesFixed ExpensesSales SalariesDepreciationVariable ExpensesTotal ExpensesTravelingDeliveryActivity levelSales Commissions		$		$		$	NAUF