Cadiz Co Uses Flexible Budgets to Control Its Selling Expenses

question 151

Essay

Cadiz Co. uses flexible budgets to control its selling expenses. Monthly sales are expected to be from $300,000 to $360,000. Variable costs and their percentage relationships to sales are:
Fixed selling expenses consist of sales salaries $40,000 and depreciation on delivery equipment $10,000.
The actual selling expenses incurred in February, 2016, by Cadiz are as follows:
Fixed selling expenses consist of sales salaries $41,500 and depreciation on delivery equipment $10,000.
Instructions
Prepare a flexible budget performance report, assuming that February sales were $330,000.

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Definitions:

Coupon Rate

A yearly interest payment as a percentage of the bond's nominal value.

Yield

The income return on an investment, typically expressed as an annual percentage, including dividend payments for stocks and interest payments for bonds.

Real Rate

The rate of interest an investor expects to receive after allowing for inflation.

Term Structure

A representation of how the yield of fixed-income securities varies with different terms or maturity periods.