Exercise 22-5 DeWitt Company uses flexible budgets to control its selling expenses.

| March 29, 2017

Question
Exercise 22-5
DeWitt Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $173,400 to $213,300. Variable costs and their percentage relationship to sales are sales commissions 7%, advertising 5%, traveling 4%, and delivery 1%. Fixed selling expenses will consist of sales salaries $35,372, depreciation on delivery equipment $7,226, and insurance on delivery equipment $1,624.

Prepare a monthly flexible budget for each $13,300 increment of sales within the relevant range for the year ending December 31, 2014. (List variable costs before fixed costs.)

DEWITT COMPANY
Monthly Selling Expense Flexible Budget
For the Year 2014
AdvertisingActivity LevelDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelingVariable Expenses
AdvertisingActivity LevelDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelingVariable Expenses $ $ $ $
AdvertisingActivity LevelDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelingVariable Expenses
Advertising Activity Level Depreciation Delivery Fixed Expenses Insurance Sales Sales Commissions Sales Salaries Total Expenses Total Fixed Expenses Total Variable Expenses Traveling Variable Expenses $ $ $ $
Advertising Activity Level Depreciation Delivery Fixed Expenses Insurance Sales Sales Commissions Sales Salaries Total Expenses Total Fixed Expenses Total Variable Expenses Traveling Variable Expenses
Advertising Activity Level Depreciation Delivery Fixed Expenses Insurance Sales Sales Commissions Sales Salaries Total Expenses Total Fixed Expenses Total Variable Expenses Traveling Variable Expenses
Advertising Activity Level Depreciation Delivery Fixed Expenses Insurance Sales Sales Commissions Sales Salaries Total Expenses Total Fixed Expenses Total Variable Expenses Traveling Variable Expenses
AdvertisingActivity LevelDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelingVariable Expenses
AdvertisingActivity LevelDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelingVariable Expenses
Advertising Activity Level Depreciation Delivery Fixed Expenses Insurance Sales Sales Commissions Sales Salaries Total Expenses Total Fixed Expenses Total Variable Expenses Traveling Variable Expenses
Advertising Activity Level Depreciation Delivery Fixed Expenses Insurance Sales Sales Commissions Sales Salaries Total Expenses Total Fixed Expenses Total Variable Expenses Traveling Variable Expenses
Advertising Activity Level Depreciation Delivery Fixed Expenses Insurance Sales Sales Commissions Sales Salaries Total Expenses Total Fixed Expenses Total Variable Expenses Traveling Variable Expenses
AdvertisingActivity LevelDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelingVariable Expenses
AdvertisingActivity LevelDepreciationDeliveryFixed ExpensesInsuranceSalesSales CommissionsSales SalariesTotal ExpensesTotal Fixed ExpensesTotal Variable ExpensesTravelingVariable Expenses $ $ $ $
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Exercise 22-2 Crede Company budgeted selling expenses of $30,317 in January, $34,443 in February, and $40,724 in March. Actual selling expenses were $32,197 in January, $33,921 in February, and $47,002 in March.

(a)

Prepare a selling expense report that compares budgeted and actual amounts by month and for the year to date.

CREDE COMPANY
Selling Expense Report
For the Quarter Ending March 31
By Month Year-to-Date
Month Budget Actual Difference Budget Actual Difference
January $ $ $ FUN $ $ $ FUN
February $ $ $ FUN $ $ $ FUN
March $ $ $ FUN $ $ $ FUN
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