Cadiz Co Uses Flexible Budgets to Control Its Selling Expenses

Essay

Cadiz Co. uses flexible budgets to control its selling expenses. Monthly sales are expected to be from $300000 to $360000. Variable costs and their percentage relationships to sales are: $$\begin{array} { l l } \text { Sales commissions } & 5 \% \\\text { Advertising } & 4 \% \\\text { Traveling } & 7 \% \\\text { Delivery } & 1 \%\end{array}$$ Fixed selling expenses consist of sales salaries $40000 and depreciation on delivery equipment $10000.
The actual selling expenses incurred in February 2016 by Cadiz are as follows: $$\begin{array} { l r } \text { Sales commissions } & \$ 17,200 \\\text { Advertising } & 12,000 \\\text { Traveling } & 23,700 \\\text { Delivery } & 2,400\end{array}$$ Fixed selling expenses consist of sales salaries $41500 and depreciation on delivery equipment $10000.
Instructions
Prepare a flexible budget performance report assuming that February sales were $330000.