Question

Flexible Budget for Selling and Administrative Expenses for a Service Company

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

Sales commissions	9% of sales
Advertising expense	17% of sales
Miscellaneous administrative expense	$1,750 per month plus 2% of sales
Office salaries expense	$17,000 per month
Customer support expenses	$2,500 plus 3% of sales
Research and development expense	4,400 per month

Prepare a flexible selling and administrative expenses budget for April for sales volumes of $110,000, $140,000, and $165,000. Enter all amounts as positive numbers.

Morningside Technologies Inc.
Flexible Selling and Administrative Expenses Budget
For the Month Ending April 30
Total sales	$110,000	$140,000	$165,000
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

Morningside Technologies Inc.
Flexible Selling and Administrative Expenses Budget
For the Month Ending April 30
Total sales	$1,10,000.00	$1,40,000.00	$1,65,000.00
Variable cost:
Sales commissions	$     9,900.00	$   12,600.00	$   14,850.00
Advertising expense	$   18,700.00	$   23,800.00	$   28,050.00
Miscellaneous administrative expense	$     2,200.00	$     2,800.00	$     3,300.00
Customer support expenses	$     3,300.00	$     4,200.00	$     4,950.00
Total variable cost	$   34,100.00	$   43,400.00	$   51,150.00
Fixed cost:
Miscellaneous administrative expense	$     1,750.00	$     1,750.00	$     1,750.00
Office salaries expense	$   17,000.00	$   17,000.00	$   17,000.00
Customer support expenses	$     2,500.00	$     2,500.00	$     2,500.00
Research and development expense	$     4,400.00	$     4,400.00	$     4,400.00
Total fixed cost	$   25,650.00	$   25,650.00	$   25,650.00
Total selling and administrative expenses	$   59,750.00	$   69,050.00	$   76,800.00