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	5% of sales
Advertising expense	19% of sales
Miscellaneous administrative expense	$1,850 per month plus 3% of sales
Office salaries expense	$17,000 per month
Customer support expenses	$2,600 plus 4% of sales
Research and development expense	5,750 per month

Prepare a flexible selling and administrative expenses budget for April for sales volumes of $115,000, $145,000, and $175,000. Enter all amounts as positive numbers.

Morningside Technologies Inc.
Flexible Selling and Administrative Expenses Budget
For the Month Ending April 30
Total sales	$115,000	$145,000	$175,000
Variable cost:
Sales commissions	$	$	$
Advertising expense
Miscellaneous administrative expense
Customer support expense
Total variable cost	$	$	$
Fixed cost:
Miscellaneous administrative expense	$	$	$
Office salaries expense
Customer support expense
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	$115,000	$145,000	$175,000
Variable cost:
Sales commissions(5% of sales)	5750	7250	8750
Advertising expense (19% of sales)	21850	27550	33250
Miscellaneous administrative expense (3% of sales)	$3,450	$4,350	$7,100
Customer support expense	4600	5800	7000
Total variable cost	$35,650	$44,950	$56,100
Fixed cost:
Miscellaneous administrative expense	1850	1850	1850
Office salaries expense	17000	17000	17000
Customer support expense	2600	2600	2600
Research and development expense	5750	5750	5750
Total fixed cost	27200	27200	27200
Total selling and administrative expenses	$62,850	$72,150	$83,300

Working notes for the above answer is as under