Question

Crede Company budgeted selling expenses of $30,000 in January, $35,000 in February, and $40,000 in March. Actual selling expenses were $31,200 in January, $34,525 in February, and $46,000 in March.Instructions:Prepare a selling expense report that compares budgeted and actual amounts by month and for the year to date.What is the purpose of the report prepared in

Answer 1

Answer:

                                              JANUARY   FEBRUARY   MARCH    TOTAL

Budgeted selling expenses     30,000     35,000        40,000     105,000

Actual selling expenses            31,200      34,525        46,000     111,725

Variance                                     1,200(U)     475(F)         6,000(A)  6,725(A)

The purpose of this report is to determine the variance between the budgeted selling expenses and actual selling expenses in order to control the selling expenses. This is the comparison between flexible budgets for each month and actual selling expenses incurred. This will assist the management of Crede Company to control the adverse variances that emanate and take correct measure.              

Explanation:

In this case, we will deduct the actual selling expenses for each month from the budgeted selling expenses in order to obtain variances for each month.