Estimating flexible selling expense budget and computing variances.Golden Nugget estimates the following selling expenses next period:

Required:
a.Derive the cost equation (y = a + bx)for selling expenses.(Hint: y = a + bx + cy. )
b.Assume that Golden actually sells 60,000 units during the period at an average price of $7 per unit.The company had budgeted sales for the period to be: volume,75,000 units;price,$6.50.Calculate the sales price and volume variance.
c.The actual selling expenses incurred during the period were $90,000 fixed and $40,000 variable.Prepare a profit variance analysis for sales revenue and selling expenses.

Question

Estimating flexible selling expense budget and computing variances.Golden Nugget estimates the following selling expenses next period:
  
Required:
a.Derive the cost equation (y = a + bx)for selling expenses.(Hint: y = a + bx + cy. )
b.Assume that Golden actually sells 60,000 units during the period at an average price of $7 per unit.The company had budgeted sales for the period to be: volume,75,000 units;price,$6.50.Calculate the sales price and volume variance.
c.The actual selling expenses incurred during the period were $90,000 fixed and $40,000 variable.Prepare a profit variance analysis for sales revenue and selling expenses.

Quizplus · Accepted Answer

The Answer of Estimating flexible selling expense budget and computing variances.Golden Nugget estimates the following selling expenses next period:
  
Required:
a.Derive the cost equation (y = a + bx)for selling expenses.(Hint: y = a + bx + cy. )
b.Assume that Golden actually sells 60,000 units during the period at an average price of $7 per unit.The company had budgeted sales for the period to be: volume,75,000 units;price,$6.50.Calculate the sales price and volume variance.
c.The actual selling expenses incurred during the period were $90,000 fixed and $40,000 variable.Prepare a profit variance analysis for sales revenue and selling expenses.

Estimating Flexible Selling Expense Budget and Computing Variances