Flexible Budget for Selling and Administrative Expenses for a Service Company Cl
ID: 2406347 • Letter: F
Question
Flexible Budget for Selling and Administrative Expenses for a Service Company
Cloud Productivity Inc. uses flexible budgets that are based on the following data:
Prepare a flexible selling and administrative expenses budget for March for sales volumes of $400,000, $500,000, and $600,000. (Use Exhibit 5 as a model.)
$
Sales commissions 14% of sales Advertising expense 20% of sales Miscellaneous administrative expense $5,000 per month plus 12% of sales Office salaries expense $29,000 per month Customer support expenses $13,000 per month plus 20% of sales Research and development expense $32,000 per monthExplanation / Answer
Flexible Selling and Administrative Expenses Budget For the Month Ending March 31
Total sales $400000 $500000 $600000 Variable cost: Sales commissions 14% of sales 56000 70000 84000 Advertising expense 20% of sales 80000 100000 120000 Miscellaneous administrative expense 12% of sales 48000 60000 72000 Customer support expenses 20% of sales 80000 100000 120000 Total variable cost 264000 330000 396000 Fixed cost: Miscellaneous administrative expense 5000 5000 5000 Office salaries expense 29000 29000 29000 Customer support expenses 13000 13000 13000 Research and development expense 32000 32000 32000 Total fixed cost 79000 79000 79000 Total selling and administrative expenses 343000 409000 475000Related Questions
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