Question

The Cottonwood Company for sales volumes of $300,000, $350,000, and $400,000, based on the following data:

Sales commissions	6% of sales
Sales manager's salary	$120,000 per month
Advertising expense	$90,000 per month
Shipping expense	1% of sales
Miscellaneous selling expense	$6,000 per month plus 1.5% of sales

Required:

Prepare a monthly flexible selling expense budget for Cottonwood Company for December, 2016. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading.

Labels and Amount Descriptions

Labels
December 31, 2016
For the Month Ending December 31, 2016
Amount Descriptions
Advertising expense
Miscellaneous selling expense
Sales commissions
Sales salaries expense
Sales volume
Shipping expense
Total fixed expense
Total selling expense
Total variable expense

Selling Expense Budget

Prepare a monthly flexible selling expense budget for Cottonwood Company for December, 2016. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading.

Cottonwood Company

Monthly Selling Expense Budget

1	Sales volume	$300,000.00	$350,000.00	$400,000.00
2	Variable expense:
3
4
5
6
7	Fixed expense:
8
9
10
11
12

Answer 1

• All working forms part of the answer

Cottonwood Company
Monthly Selling Expense Budget
1	Sales volume	$ 3,00,000.00	$ 3,50,000.00	$ 4,00,000.00
2	Variable expense:
3 = 1 x 6%	Sales Commissions	$             18,000.00	$             21,000.00	$              24,000.00
4 = 1 x 1%	Shipping expense	$               3,000.00	$               3,500.00	$                4,000.00
5 = 1 x 1.5%	Miscellaneous Selling expenses	$               4,500.00	$               5,250.00	$                6,000.00
6 = 3+4+5	Total variable expense	$             25,500.00	$             29,750.00	$              34,000.00
7	Fixed expense:
8	Sales Salaries expense	$          1,20,000.00	$          1,20,000.00	$           1,20,000.00
9	Advertising expense	$             90,000.00	$             90,000.00	$              90,000.00
10	Miscellaneous Selling expenses	$               6,000.00	$               6,000.00	$                6,000.00
11 = 8+9+10	Total fixed expense	$          2,16,000.00	$          2,16,000.00	$           2,16,000.00
12 = 6+ 11	Total Selling expense	$            2,41,500.00	$            2,45,750.00	$             2,50,000.00