Answer and Explanation:
The preparation of flexible budget is shown below:-
Budget Actual Difference F/U
$330,000 $330,000
Variable expenses
Sales commissions $16,500 $17,200 $700 U
($330,000 × 5%)
Advertising $13,200 $12,000 $1200 F
($330,000 × 4%)
Traveling $23,100 $23,700 $600 U
($330,000 × 7%)
Delivery $3,300 $2,400 $900 F
($330,000 × 1%)
Total variable expenses a $56,100 $55,300 $800 F
Fixed expenses
Sales salaries $40,000 $41,500 $1,500 U
Depreciation $10,000 $10,000 0 NA
Total fixed expenses b $50,000 $51,500 $1,500 U
Total expenses (a+b) $106,100 $106,800 $700 U
Therefore, if budget is more than actual then it will be favorable and if actual is more than budget then it will be unfavorable.
According to this the classification of every items is shown above.
