Question

Lim Company wants you to prepare a flexible budget for selling and administrative expenses. The general manager and the sales manager have met with all the department heads, who provided the following information regarding selling and administrative expenses:

1.	The company employs 30 full-time junior salespersons with a base salary of $3,600 each per month plus commissions, and 10 full-time senior salespersons with a salary of $6,000 each per month plus commissions. In addition, the company employs nine regional sales managers with a salary of $21,600 per month, none of whom is entitled to any commissions.
2.	If the sales volume exceeds $65 million per year, the company must hire four more junior salespersons, each at a salary of $3,600 per month plus commissions.
3.	Sales commissions are either 10% or 5% of the selling price, depending on the product sold. Typically a 10% commission applies on 60% of sales, and a 5% commission applies on the remaining sales.
4.	Salespersons' travel allowances average $1,500 per month per salesperson (excluding managers).
5.	Advertising expenses average $150,000 per month plus 3% of sales.
6.	Selling supplies expense is estimated at 1% of sales.
7.	Administrative salaries are $300,000 per month.
8.	Additional administrative expenses include the following:       Rent--$48,000 per month       Office supplies--2% of sales       Other--$12,000 per month

Required: Prepare an annual flexible budget for selling and administrative expenses for annual sales volume of $40 million, $50 million, $60 million, and $70 million.