The Marketing Director of VCC Limited is dissatisfied with the variances reported to him on the basis of actual costs being compared with the fixed budget for the costs attributed to the marketing function. As the management accountant, he is seeking your help in preparing a flexible budget for the calendar year 2021, based on the following information which is based on an estimated sales level of $10 million unless otherwise stated. Fixed costs Salaries -sales representatives Sales office Salary -related costs. Rent Depreciation: Furniture 200 60 32 100 5 Cars Insurance Advertising Variable costs 67 20 250 Sales representatives' commission Salary-related costs - 12 ^ (1/2)% Bad debts 64 8 Sales representatives' ordinary expenses 25 100 Stationery and postage 50 Agency fees 80 Semi-variable costs Telephone rentals 2,000 Metered calls 14,000 Sales representatives' car expenses excluding depreciation: Fixed Variable 7,000 48,000 22/01 The Council of Community Colleges of Jamaica Page 2 ACCT3603 Sales promotions: the budget figures are to be based on the costs given below which relate to the years 2016 to 2019 and the estimates for 2020. Year Costs Sales \$million 2016 384 4.2 2017 402 5.1 2018 368 3.4 2019 450 7.5 2020 (estimate) 478 8.9 Required: Prepare a flexible budget for sales levels of $9m, $10m and $11.5m.
