Flexible Budget for Selling and Administrative Expenses for a Service Company
Cloud Productivity Inc. uses flexible budgets that are based on the following data:
Sales commissions | 14% of sales |
Advertising expense | 20% of sales |
Miscellaneous administrative expense | $6,500 per month plus 12% of sales |
Office salaries expense | $29,000 per month |
Customer support expenses | $13,000 per month plus 20% of sales |
Research and development expense | $32,000 per month |
Prepare a flexible selling and administrative expenses budget for March for sales volumes of $400,000, $500,000, and $600,000. (Use Exhibit 5 as a model.)
Cloud Productivity Inc. | |||
Flexible Selling and Administrative Expenses Budget | |||
For the Month Ending March 31 | |||
Total sales | $400000 | $500000 | $600000 |
Variable cost: | |||
$ | $ | $ | |
Total variable cost | $ | $ | $ |
Fixed cost: | |||
$ | $ | $ | |
Total fixed cost | $ | $ | $ |
Total selling and administrative expenses | $ | $ | $ |
Answer-
CLOUD PRODUCTIVITY INC. | ||||
FLEXIBLE SELLING AND ADMINISTRATIVE EXPENSES BUDGET | ||||
FOR THE MONTH ENDING MARCH 31 | ||||
Particulars | Amount | Amount | Amount | Amount |
$ | $ | $ | ||
Sales | 400000 | 500000 | 600000 | 1500000 |
Variable Expesnes:- % of sales | ||||
Sales commissions 14% of sales | 56000 | 70000 | 84000 | 210000 |
Advertising expense 20% of sales | 80000 | 100000 | 120000 | 300000 |
Miscellaneous administrative expense 12% of sales | 48000 | 60000 | 72000 | 180000 |
Customer support expenses 20% of sales | 80000 | 100000 | 120000 | 300000 |
Total Variable expenses (a) | 264000 | 330000 | 396000 | 990000 |
Fixed Expenses:- | ||||
Miscellaneous administrative expense | 6500 | 6500 | 6500 | 19500 |
Office salaries expense | 29000 | 29000 | 29000 | 87000 |
Customer support expenses | 13000 | 13000 | 13000 | 39000 |
Research and development expense | 32000 | 32000 | 32000 | 96000 |
Total Fixed expenses (b) | 80500 | 80500 | 80500 | 241500 |
Total Selling and Administrative Expesnses (c=a+b) | 344500 | 410500 | 476500 | 1231500 |
Flexible Budget for Selling and Administrative Expenses for a Service Company Cloud Productivity Inc. uses flexible...
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Flexible Budget for Selling and Administrative Expenses for a Service Company Cloud Productivity Inc. uses flexible budgets that are based on the following data: Sales commissions 15% of sales Advertising expense 20% of sales Miscellaneous administrative expense $5,000 per month plus 12% of sales Office salaries expense $30,000 per month Customer support expenses $13,000 per month plus 20% of sales Research and development expense $30,000 per month Prepare a flexible selling and administrative expenses budget for March for sales volumes...
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