Question

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	8% of sales
Advertising expense	20% of sales
Miscellaneous administrative expense	$1,700 per month plus 1% of sales
Office salaries expense	$16,000 per month
Customer support expenses	$2,350 plus 2% of sales
Research and development expense	3,150 per month

Prepare a flexible selling and administrative expenses budget for April for sales volumes of $105,000, $130,000, and $160,000. Enter all amounts as positive numbers.

Morningside Technologies Inc.
Flexible Selling and Administrative Expenses Budget
For the Month Ending April 30
Total sales	$105,000	$130,000	$160,000
Variable cost:
Sales commissions	$	$	$
Advertising expense
Miscellaneous administrative expense
Customer support expense
Total variable cost	$	$	$
Fixed cost:
Miscellaneous administrative expense	$	$	$
Office salaries expense
Customer support expense
Research and development expense
Total fixed cost	$	$	$
Total selling and administrative expenses

Answer 1

Morningside Technologies Inc.
Flexible Selling and Administrative Expenses Budget
For the Month Ending April 30
Total sales	$105,000	$130,000	$160,000
Variable cost:
Sales commissions	$8,400	$10,400	$12,800
Advertising expense	$21,000	$26,000	$32,000
Miscellaneous administrative expense	$1,050	$1,300	$1,600
Customer support expense	$2,100	$2,600	$3,200
Total variable cost	$32,550	$40,300	$49,600
Fixed cost:
Miscellaneous administrative expense	1700	1700	1700
Office salaries expense	16000	16000	16000
Customer support expense	2350	2350	2350
Research and development expense	3150	3150	3150
Total fixed cost	23200	23200	23200
Total selling and administrative expenses	$55,750	$63,500	$72,800