Question

Flexible Budget for Selling and Administrative Expenses

Agent Blaze uses flexible budgets that are based on the following data:

Sales commissions	9% of sales
Advertising expense	25% of sales
Miscellaneous selling expense	$2,500 plus 3% of sales
Office salaries expense	$17,000 per month
Office supplies expense	4% of sales
Miscellaneous administrative expense	$1,750 per month plus 2% of sales

Prepare a flexible selling and administrative expenses budget for January 2016, for sales volumes of $110,000, $140,000, and $165,000. (Use Exhibit 5 as a model.) Enter all amounts as positive numbers.

Agent Blaze
Flexible Selling and Administrative Expenses Budget
For the Month Ending January 31, 2016
Total sales	$110,000	$140,000	$165,000
Variable cost:
Sales commissions	$	$	$
Advertising expense
Miscellaneous selling expense
Office supplies expense
Miscellaneous administrative expense
Total variable cost	$	$	$
Fixed cost:
Miscellaneous selling expense	$	$	$
Office salaries expense
Miscellaneous administrative expense
Total fixed cost	$	$	$
Total selling and administrative expenses	$	$	$

Answer 1

Variable expense changes according to sales volume. Fixed expense remains same irrespective of sales volume. Some expenses are both variable and fixed. The fixed part does not change with sales volume but variable part changes according to sales volume. In given question, miscellaneous selling expenses and miscellaneous administrative expenses are semi variable expenses.