Part B RDX uses flexible budgets to control its selling expenses. Variable costs as a percentage of sales are as follows: Sales commissions 5% Advertising 4% Traveling 7% Delivery 1% Fixed selling expenses consist of sales salaries $45,500 and depreciation on delivery equipment $12,000. The actual selling expenses incurred in February 2019, by RDX are as follows: Sales commissions $19,200 $12,800 Advertising Traveling Delivery $20,200 $3,600 Actual fixed selling expenses consist of sales salaries $41,500 and depreciation on delivery equipment $12,000. Required: Assuming that February sales were $330,000, prepare a flexible budget performance report for February. For each item in the report state where applicable, if the difference is Favourable or Unfavourable.
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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