Question

Morningside Technologies Inc. uses flexible budgets that are based on the following data:

Sales commissions	5% of sales
Advertising expense	25% of sales
Miscellaneous administrative expense	$1,450 per month plus 2% of sales
Office salaries expense	$14,000 per month
Customer support expenses	$2,050 plus 3% of sales
Research and development expense	3,600 per month

Prepare a flexible selling and administrative expenses budget for April for sales volumes of $90,000, $115,000, and $135,000. Enter all amounts as positive numbers.

Morningside Technologies Inc.
Flexible Selling and Administrative Expenses Budget
For the Month Ending April 30
Total sales	$90,000	$115,000	$135,000
Variable cost:
Sales commissions	$	$	$
Advertising expense
Miscellaneous administrative expense
Customer support expenses
Total variable cost	$	$	$
Fixed cost:
Miscellaneous administrative expense	$	$	$
Office salaries expense
Customer support expenses
Research and development expense
Total fixed cost	$	$	$
Total selling and administrative expenses	$	$	$

Answer 1

Ans.	Morning side Technologies Inc.
	Flexible Selling and Administrative Expenses Budget
	For the Month Ending April 30
	Total sales	$90,000	$115,000	$135,000
	Variable cost:
	Sales commissions	$4,500	$5,750	$6,750
	Advertising expense	$22,500	$28,750	$33,750
	Miscellaneous administrative expense	$1,800	$2,300	$2,700
	Customer support expenses	$2,700	$3,450	$4,050
	Total variable cost (a)	$31,500	$40,250	$47,250
	Fixed cost:
	Miscellaneous administrative expense	$1,450	$1,450	$1,450
	Office salaries expenses	$14,000	$14,000	$14,000
	Customer support expenses	$2,050	$2,050	$2,050
	Research and development expenses	$3,600	$3,600	$3,600
	Total fixed cost (b)	$21,100	$21,100	$21,100
	Total selling and administrative expenses (a+b)	$52,600	$61,350	$68,350
	*Calculations for Variable costs:
	Total sales	$90,000	$115,000	$135,000
	Variable cost:
	Sales commissions	$90,000 * 5%	$115,000 * 5%	$135,000 * 5%
	Advertising expense	$90,000 * 25%	$115,000 * 25%	$135,000 * 25%
	Miscellaneous administrative expense	$90,000 * 2%	$115,000 * 2%	$135,000 * 2%
	Customer support expenses	$90,000 * 3%	$115,000 * 3%	$135,000 * 3%
	*Fixed cost always remain constant.
	*Miscellaneous expenses, customer support expenses and research & development expenses are semi-variable costs.
	Semi variable costs are the combination of fixed and variable cost. The fixed element has been separated, from these
	semi variable costs.