The actual selling expenses incurred in March 2020 by Moscavide Publishers are as follows.

Instructions

a. Prepare a flexible budget performance report for March using the budget data in E25.5, assuming that March sales were €170,000.

b. Prepare a flexible budget performance report, assuming that March sales were €180,000.

c. Comment on the importance of using flexible budgets in evaluating the performance of the sales manager.

Data from E25.5:

Moscavide Publishers uses flexible budgets to control its selling expenses. Monthly sales are expected to range from €170,000 to €200,000. Variable costs and their percentage relationship to sales are sales commissions 6%, advertising 4%, traveling 3%, and delivery 2%. Fixed selling expenses will consist of sales salaries €35,000, depreciation on delivery equipment €7,000, and insurance on delivery equipment €1,000.

Transcribed Image Text:

Variable Expenses €11,000 Fixed Expenses Sales salaries Sales commissions €35,000 6,900 5,100 3,450 Advertising Travel Depreciation 7,000 1,000 Insurance Delivery