Flexible Budget for Selling and Administrative Expenses for a Service Company Cl

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: Sales commissions Advertising expense 14% of sales 20% of sales $8,000 per month plus 12% of sales $28,000 per month $12,000 per month plus 20% of sales $30,000 per month Office salaries expense Customer support expenses Research and development expense 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.) Cloud Productivity Inc. Flexible Selling and Administrative Expenses Budget For the Month Ending March 31 Total sales Variable cost: $400000 $500000 $600000 Total variable cost

Explanation / Answer

Selling and administrative expense budget :

Total sales 400000 500000 600000 Variable cost Sales commission 56000 70000 84000 Advertising expense 80000 100000 120000 Miscellaneous administrative expense 48000 60000 72000 Customer support expense 80000 100000 120000 Total variable cost 264000 330000 396000 Fixed cost Miscellaneous administrative expense 8000 8000 8000 Office salaries expense 28000 28000 28000 Customer support expense 12000 12000 12000 Research and development expense 30000 30000 30000 Total fixed cost 78000 78000 78000 Total cost 342000 408000 474000

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