Question

Prepare a monthly flexible selling expense budget for 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

Cottonwood Company
Monthly Selling Expense Budget
Sales volume	$	$	$
Variable expense:
Sales commissions	$	$	$
Shipping expense
Miscellaneous selling expense
Total variable expense	$	$	$
Fixed expense:
Sales salaries expense	$	$	$
Advertising expense
Miscellaneous selling expense
Total fixed expense	$	$	$
Total selling expense	$	$	$

Answer 1

Solution

Cottonwood Company
Monthly Selling Expense Budget
Sales volume	$ 300,000.00	$350,000.00	$400,000.00
Variable expense:
Sales commissions	$   18,000.00	$ 21,000.00	$ 24,000.00
Shipping expense	$    3,000.00	$    3,500.00	$    4,000.00
Miscellaneous selling expense	$    4,500.00	$    5,250.00	$    6,000.00
Total variable expense	$   25,500.00	$ 29,750.00	$ 34,000.00
Fixed expense:
Sales salaries expense	$ 120,000.00	$120,000.00	$120,000.00
Advertising expense	$   90,000.00	$ 90,000.00	$ 90,000.00
Miscellaneous selling expense	$    6,000.00	$    6,000.00	$    6,000.00
Total fixed expense	$ 216,000.00	$216,000.00	$216,000.00
Total selling expense	$ 241,500.00	$245,750.00	$250,000.00