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 Miscellaneous administrative expense $6,500 per month plus 12% of sales Office salaries expense Customer support expenses Research and development expense $32,000 per month 15% of sales 20% of sales $28,000 per month $12,000 per month plus 20% of sales 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 $400000 $500000 $600000 Total sales Variable cost: Total variable cost Fixed cost: Total foxed cost otal selling and administrative expenses

Explanation / Answer

Selling and administrative expense budget:

Total sales 400000 500000 600000 Variable costs Sales commission 60000 75000 90000 Advertising expense 80000 100000 120000 Miscellaneous administration expense 48000 60000 72000 Customer support expense 80000 100000 120000 Total 268000 335000 402000 Fixed cost Miscellaneous administrative expense 6500 6500 65000 Office salaries expense 28000 28000 28000 Customer support expense 12000 12000 12000 Research and development expense 32000 32000 32000 Total fixed cost 78500 78500 78500 Total selling and administrative expense 346500 413500 480500

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