Flexible Budget for Selling and Administrative Expenses

Fuller Enterprises uses flexible budgets that are based on the following data:

Sales commissions	10% of sales
Advertising expense	20% of sales
Customer support expense	$2,050 plus 3% of sales
Office salaries expense	$14,000 per month
Miscellaneous administrative expense	$2,000 plus 2% of sales
Research and development expense	$1,450 per month

Prepare a flexible selling and administrative expenses budget for July for sales volumes of $90,000, $115,000, and $135,000. (Use Exhibit 5 as a model.) Enter all amounts as positive numbers.

FULLER ENTERPRISES Flexible Selling and Administrative Expenses Budget For the Month Ending July 31

Total sales	$90,000	$115,000	$135,000
Variable cost:
Miscellaneous selling expensesResearch and development expenseSales commissionsSales feesSales commissions	$Sales commissions	$Sales commissions	$Sales commissions
Advertising expenseOffice salaries expenseOffice supplies expenseSales revenueAdvertising expense	Advertising expense	Advertising expense	Advertising expense
Customer support expenseOffice supplies expenseResearch and development expenseSales feesCustomer support expense	Customer support expense	Customer support expense	Customer support expense
Miscellaneous administrative expenseMiscellaneous selling expenseOffice salaries expenseSales revenueMiscellaneous administrative expense	Miscellaneous administrative expense	Miscellaneous administrative expense	Miscellaneous administrative expense
Total variable cost	$fill in the blank 17	$fill in the blank 18	$fill in the blank 19
Fixed cost:
Advertising expenseCustomer support expenseOffice supplies expenseSales commissionsSales revenueCustomer support expense	$Customer support expense	$Customer support expense	$Customer support expense
Advertising expenseOffice supplies expenseOffice salaries expenseSales commissionsSales revenueOffice salaries expense	Office salaries expense	Office salaries expense	Office salaries expense
Advertising expenseMiscellaneous administrative expenseOffice supplies expenseSales commissionsSales RevenueMiscellaneous administrative expense	Miscellaneous administrative expense	Miscellaneous administrative expense	Miscellaneous administrative expense
Advertising expenseOffice supplies expenseResearch and development expenseSales commissionsSales RevenueResearch and development expense	Research and development expense	Research and development expense	Research and development expense
Total fixed cost	$fill in the blank 36	$fill in the blank 37	$fill in the blank 38
Total selling and administrative expenses	$fill in the blank 39	$fill in the blank 40	$fill in the blank 41

Static Budget vs. Flexible Budget

The production supervisor of the Painting Department for Whitley Company agreed to the following monthly static budget for the upcoming year:

WHITLEY COMPANY Painting Department Monthly Production Budget
Wages	$1,112,000
Utilities	72,000
Depreciation	121,000
Total	$1,305,000

The actual amount spent and the actual units produced in the first three months in the Painting Department were as follows:

	Amount Spent		Units Produced
January	$1,231,000		102,000
February	1,178,000		93,000
March	1,127,000		84,000

The Painting Department supervisor has been very pleased with this performance, since actual expenditures have been less than the monthly budget. However, the plant manager believes that the budget should not remain fixed for every month but should "flex" or adjust to the volume of work that is produced in the Painting Department. Additional budget information for the Painting Department is as follows:

Wages per hour	$20.00
Utility cost per direct labor hour	$1.30
Direct labor hours per unit	0.50 hrs.
Planned unit production	112,000 units

Question Content Area

a. Prepare a flexible budget for the actual units produced for January, February, and March in the Painting Department. Assume depreciation is a fixed cost. Enter all amounts as positive numbers. If required, round per unit amounts to the nearest cent.

WHITLEY COMPANY Painting Department For the Three Months Ending March 31

	January	February	March
Units of production	102,000	93,000	84,000
Wages	$fill in the blank a88b02fdffe3ffa_1	$fill in the blank a88b02fdffe3ffa_2	$fill in the blank a88b02fdffe3ffa_3
Utilities	fill in the blank a88b02fdffe3ffa_4	fill in the blank a88b02fdffe3ffa_5	fill in the blank a88b02fdffe3ffa_6
Depreciation	fill in the blank a88b02fdffe3ffa_7	fill in the blank a88b02fdffe3ffa_8	fill in the blank a88b02fdffe3ffa_9
Total	$fill in the blank a88b02fdffe3ffa_10	$fill in the blank a88b02fdffe3ffa_11	$fill in the blank a88b02fdffe3ffa_12

Question Content Area

b. Compare the flexible budget with the actual expenditures for the first three months.

	January		February		March
Actual cost	$fill in the blank 137663f7a07b006_1		$fill in the blank 137663f7a07b006_2		$fill in the blank 137663f7a07b006_3
Total flexible budget	fill in the blank 137663f7a07b006_4		fill in the blank 137663f7a07b006_5		fill in the blank 137663f7a07b006_6
Excess of budget over actual costExcess of actual cost over budget	$fill in the blank 137663f7a07b006_8		$fill in the blank 137663f7a07b006_9		$fill in the blank 137663f7a07b006_10

What does this comparison suggest?

Has the Painting Department performed better than originally thought?	YesNo
Is the department spending more than expected?	YesNo

1. Sales and Production Budgets

   Bass Audio Company manufactures two models of speakers, U500 and S1000. Based on the following production and sales data for June.

   	U500		S1000
   Estimated inventory (units), June 1	280		90
   Desired inventory (units), June 30	322		78
   Expected sales volume (units):
   Northeast Region	3,300		3,700
   Southwest Region	5,900		6,650
   Unit sales price	$100		$190

   Question Content Area

   a. Prepare a sales budget. Enter all amounts as positive numbers.

   BASS AUDIO COMPANY Sales Budget For the Month Ending June 30

   Product and Area	Unit Sales Volume	Unit Sales Price	Total Sales
   Model U500:
   Northeast Region	fill in the blank 11e914092fda023_1	$fill in the blank 11e914092fda023_2	$fill in the blank 11e914092fda023_3
   Southwest Region	fill in the blank 11e914092fda023_4	fill in the blank 11e914092fda023_5	fill in the blank 11e914092fda023_6
   Total	fill in the blank 11e914092fda023_7		$fill in the blank 11e914092fda023_8
   Model S1000:
   Northeast Region	fill in the blank 11e914092fda023_9	$fill in the blank 11e914092fda023_10	$fill in the blank 11e914092fda023_11
   Southwest Region	fill in the blank 11e914092fda023_12	fill in the blank 11e914092fda023_13	fill in the blank 11e914092fda023_14
   Total	fill in the blank 11e914092fda023_15		$fill in the blank 11e914092fda023_16
   Total revenue from sales			$fill in the blank 11e914092fda023_17

   Question Content Area

   b. Prepare a production budget. Enter all amounts as positive numbers.

   BASS AUDIO COMPANY Production Budget For the Month Ending June 30

   	U500	S1000
   Expected units to be sold	fill in the blank 431cc90d2fabfc8_1	fill in the blank 431cc90d2fabfc8_2
   Less desired inventory, June 30Less estimated inventory, June 1Plus desired inventory, June 30Plus estimated inventory, June 1	- Select -	- Select -
   Total	fill in the blank 431cc90d2fabfc8_6	fill in the blank 431cc90d2fabfc8_7
   Less desired inventory, June 30Less estimated inventory, June 1Plus desired inventory, June 30Plus estimated inventory, June 1	- Select -	- Select -
   Total units to be produced	fill in the blank 431cc90d2fabfc8_11	fill in the blank 431cc90d2fabfc8_12