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% 4 Advertising Traveling Delivery 7% IN 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 12,000 23,700 2,400 Advertising Traveling Delivery 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.)
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% 4 Advertising Traveling Delivery 7% IN 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 12,000 23,700 2,400 Advertising Traveling Delivery 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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text: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%
4%
7%
1%
Advertising
Traveling
Delivery
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
12,000
Advertising
Traveling
Delivery
23,700
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
Budget
Actual
Difference
Favorable (F)
Unfavorable (U)
Not Applicable (NA)
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