Question

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.

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

Step-by-step explanation:

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