Accounting for Decision Making and Control 6th Edition by Jerold Zimmerman

Exercise 32

Wielson Company employs flexible budgeting techniques to evaluate the performance of several of its activities. The selling expense flexible budgets for three representative monthly activity levels are shown here.

The following assumptions were used to develop the selling expense flexible budgets:
• The average size of Wielson's sales force during the year was planned to be 75 people.
• Salespeople are paid a monthly salary plus commissions on gross dollar sales.
• Travel costs are best characterized as step-variable costs. The fixed portion is related to the number of salespeople, while the variable portion fluctuates with gross dollar sales.
A sales force of 80 people generated a total of 4,300 orders resulting in a sales volume of 420,000 units during November. Gross dollar sales amounted to $10.9 million. Selling expenses incurred for November were as follows:

Required:
Prepare a selling expense report for November that Wielson Company can use to evaluate its control
over selling expenses. The report should have a line for each selling expense item showing the appropriate budgeted amount, the actual selling expense, and the monthly dollar variation.