Compute the variances between actual and flexible budget

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Reference no: EM13903107

Computing variances for marketing costs. Hoyt's Telemarketing, Inc., uses telephone solicitation to sell products. The company has set standards that call for $450 of sales per hour of telephone time. Telephone solicitors receive a commission of 10 percent of dollar sales. The firm expects other variable costs, including costs of sales in the operation, to be 45 percent of sales revenue. It budgets fixed costs at $411,500 per month. The firm computes the number of sales hours per month based on the number of days in a month minus an allowance for idle time, scheduling, and other inefficiencies. This month the firm expected 180 hours of telephone calling time for each of 40 callers.

During the month, the firm earned $2,700,000 of revenues. Marketing and admin- istrative cost data for the period follow:

	Actual	Master Budget
Cost of Sales	$810,000	$972,000
Telephone Time Charges	32,200	32,400
Delivery Services	161,100	194,400
Uncollectable Accounts	121,500	145,800
Other Variable Costs	112,700	113,400
Fixed Costs	409,000	411,500

Using sales dollars as a basis for analysis, compute the variances between actual, flexible budget, and master budget for all costs including cost of sales. (Hint: Consider sales volume as an output measure.)

Reference no: EM13903107

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