Purple Company uses flexible budgets to control its selling expenses. Monthly sales are expected to be from $200,000 to $240,000. Variable costs and their percentage relationships to sales are: Sales commissions 6% Advertising 4% Traveling 5% Delivery 1% Fixed selling expenses consist of Sales Salaries $39,000 and Depreciation on Delivery Equipment $10,000. The actual variable selling expenses incurred in February, by Purple Company are as follows: Sales commissions $13,700 Advertising 8,000 Traveling 11,300 Delivery 1,600 The actual fixed selling expenses incurred in February, consist of Sales Salaries $41,000 and Depreciation on Delivery Equipment $10,000. Instructions: Prepare a flexible budget performance report, assuming that February sales were $220,000. Expected and actual sales are the same.
Purple Company uses flexible budgets to control its selling expenses. Monthly sales are expected to be from $200,000 to $240,000. Variable costs and their percentage relationships to sales are: Sales commissions 6% Advertising 4% Traveling 5% Delivery 1% Fixed selling expenses consist of Sales Salaries $39,000 and Depreciation on Delivery Equipment $10,000. The actual variable selling expenses incurred in February, by Purple Company are as follows: Sales commissions $13,700 Advertising 8,000 Traveling 11,300 Delivery 1,600 The actual fixed selling expenses incurred in February, consist of Sales Salaries $41,000 and Depreciation on Delivery Equipment $10,000. Instructions: Prepare a flexible budget performance report, assuming that February sales were $220,000. Expected and actual sales are the same.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:Purple Company uses flexible budgets to control its selling expenses. Monthly sales are expected to
be from $200,000 to $240,000. Variable costs and their percentage relationships to sales are:
Sales commissions 6%
Advertising 4%
Traveling 5%
Delivery 1%
Fixed selling expenses consist of Sales Salaries $39,000 and Depreciation on Delivery Equipment
$10,000.
The actual variable selling expenses incurred in February, by Purple Company are as follows:
Sales commissions $13,700
Advertising 8,000
Traveling 11,300
Delivery 1,600
The actual fixed selling expenses incurred in February, consist of Sales Salaries $41,000 and
Depreciation on Delivery Equipment $10,000.
Instructions:
Prepare a flexible budget performance report, assuming that February sales were $220,000. Expected.
and actual sales are the same.
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