Martinez Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $166,900 to $198,400. Variable costs and their percentage relationship to sales are sales commissions 6%, advertising 5%, traveling 4%, and delivery 2%. Fixed selling expenses will consist of sales salaries $35,300, depreciation on delivery equipment $6,600, and insurance on delivery equipment $1,000.

Prepare a monthly flexible budget for each $11,100 increment of sales within the relevant range for the year ending December 31, 2017.

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5 October, 16:42

Martinez Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $166,900 to $198,400. Variable costs and their percentage relationship to sales are sales commissions 6%, advertising 5%, traveling 4%, and delivery 2%. Fixed selling expenses will consist of sales salaries $35,300, depreciation on delivery equipment $6,600, and insurance on delivery equipment $1,000.

Prepare a monthly flexible budget for each $11,100 increment of sales within the relevant range for the year ending December 31, 2017.

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Davin Harris · Answer 1

monthly flexible budget for each $11,100 increment

Sales $11,100

Less Sales Commissions ($11,100 * 6%) ($666)

Net Sales $10,434

advertising ($11,100 * 5%) ($555)

traveling ($11,100 * 4%) ($444)

delivery ($11,100 * 2%) ($222)

Net Income $9,213

Explanation:

Consider Only the incremental costs and revenues. Fixed costs are not relevant for the $11,100 increment