Flexible Budget for Selling and Administrative Expenses for a
Service Company
Morningside Technologies Inc. uses flexible budgets that are
based on the following data:
Sales commissions
9% of sales
Advertising expense
25% of sales
Miscellaneous administrative expense
$1,700 per month plus 3% of sales
Office salaries expense
$16,000 per month
Customer support expenses
$2,350 plus 4% of sales
Research and development expense
5,250 per month
Prepare a flexible selling and administrative expenses budget
for April for sales volumes of $105,000, $130,000, and
$160,000.
_______________________________________________________________________________________________
Lorenzo’s Frozen Pizza Inc. has determined from its production
budget the following estimated production volumes for 12'' and 16''
frozen pizzas for September:
Units
12" Pizza
16" Pizza
Budgeted production volume
12,900
20,500
Three direct materials are used in producing the two types of
pizza. The quantities of direct materials expected to be used for
each pizza are as follows:
12" Pizza
16" Pizza
Direct materials:
Dough
0.80
lb. per unit
1.50
lb. per unit
Tomato
0.50
0.70
Cheese
0.70
1.30
In addition, Lorenzo’s has determined the following
information about each material:
Dough
Tomato
Cheese
Estimated inventory, September 1
550
lb.
220
lb.
320
lb.
Desired inventory, September 30
580
lb.
210
lb.
350
lb.
Price per pound
$1.20
$2.10
$3.40
Prepare September's direct materials purchases budget for
Lorenzo’s Frozen Pizza Inc. When required, enter unit prices to the
nearest cent.
__________________________________________________________________________________
Wilmington Chemical Company uses oil to produce two types of
plastic products, P1 and P2. Wilmington budgeted 24,200 barrels of
oil for purchase in June for $58 per barrel. Direct labor budgeted
in the chemical process was $154,400 for June. Factory overhead was
budgeted $252,600 during June. The inventories on June 1 were
estimated to be:
Oil
$10,800
P1
7,300
P2
6,200
Work in process
9,000
The desired inventories on June 30 were:
Oil
$11,900
P1
6,600
P2
5,900
Work in process
9,300
Use the preceding information to prepare a cost of goods sold
budget for June.