Question

1. Flexible Budget for Selling and Administrative Expenses for a Service Company

   Morningside Technologies Inc. uses flexible An accounting device used to plan and control resources of operational departments and divisions.budgets that are based on the following data:

   Sales commissions	6% of sales
   Advertising expense	25% of sales
   Miscellaneous administrative expense	$1,350 per month plus 1% of sales
   Office salaries expense	$13,000 per month
   Customer support expenses	$1,900 plus 2% of sales
   Research and development expense	2,550 per month

   Prepare a flexible selling and administrative expenses budget for April for sales volumes of $85,000, $105,000, and $130,000. Enter all amounts as positive numbers.

   Morningside Technologies Inc.
   Flexible Selling and Administrative Expenses Budget
   For the Month Ending April 30
   Total sales	$85,000	$105,000	$130,000
   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

Solution

Morningside Technologies Inc.
Flexible Selling and Administrative Expenses Budget
For the Month Ending April 30
Total sales	$85,000.00	$ 105,000.00	$ 130,000.00
Variable cost:
Sales commissions	$ 5,100.00	$     6,300.00	$     7,800.00
Advertising expense	$21,250.00	$   26,250.00	$   32,500.00
Miscellaneous administrative expense	$     850.00	$     1,050.00	$     1,300.00
Customer support expenses	$ 1,700.00	$     2,100.00	$     2,600.00
Total variable cost	$28,900.00	$   35,700.00	$   44,200.00
Fixed cost:
Miscellaneous administrative expense	$ 1,350.00	$     1,350.00	$     1,350.00
Office salaries expense	$13,000.00	$   13,000.00	$   13,000.00
Customer support expenses	$ 1,900.00	$     1,900.00	$     1,900.00
Research and development expense	$ 2,550.00	$     2,550.00	$     2,550.00
Total fixed cost	$18,800.00	$   18,800.00	$   18,800.00
Total selling and administrative expenses	$47,700.00	$   54,500.00	$   63,000.00