Question

Morningside Technologies Inc. uses flexible budgets that are based on the following data:

Sales commissions	10% of sales
Advertising expense	15% of sales
Miscellaneous administrative expense	$1,700 per month plus 1% of sales
Office salaries expense	$16,000 per month
Customer support expenses	$2,350 plus 2% of sales
Research and development expense	3,150 per month

Prepare a flexible selling and administrative expenses budget for April for sales volumes of $105,000, $130,000, and $160,000. Enter all amounts as positive numbers.

Morningside Technologies Inc. Flexible Selling and Administrative Expenses Budget For the Month Ending April 30 Total sales $105,000 $130,000 $160,000 Variable cost: Sales commissions Advertising expense Miscellaneous administrative expense Customer support expenses Total variable cost Fixed cost: Miscellaneous administrative expense Office salaries expense Customer support expenses Research and development expense A Total fixed cost A Total selling and administrative expenses

Answer 1

Morningside Technologies Inc. Flexible selling and Administrative Expenses Budget for the Mouth Ending April 30 Total sales $105,000 $130,000 $160,000 Variable cost Sales commissions $ 10,500 $13,000 $16,000 Advertising expense $15,750 $19,500 $24,000 Miscellaneous administrative expense $1,050 $1,300 $1,600 Customer support expenses $2,000 $2,600 $3,200 Total variable cost $29,400 $36,400 $44,800 fixed cost? Miscellaneous administrative expense $1,700 $1,700 I $1,700 office salaries expense $16,000 $16,000 $16,000 . Customer support expenses $2,350 $2,350 $2,350 Research and development expense $3,150 $3,150 $3,150 Total fixed cost $23,200 $23,200 $23,200 Total selling and administrative ve $52,600 $59,600 $68,000 xpenses

Calculation: Sales commissions = 10% of sales. for $105,000? Sales commissions = 10% * $105,000 = $ 10,5oo for $130,000? Sales commissions = 10% x $130,000 = $13,000 for $160,000: sales commissieus = 1024 $160,000 = $ 16,000 Advertising expenses = 15% of sales for $ 105,000. Advertising expenses a 15% x $ 105,000 = $15,750 for $130,00 or Advertising expenses a 15% * $ 130,000 - $ 19,500 for $160,000 - Advertising expenses a 15% * $ 160,000 = $24,000

Miscellaneous administrative expenses = 1% of sales for $130,000 & Miscellaneous administrative expenses = 1% * $ 130,000 = $ 1,300 for $105,ooo : Miscellaneous admin. expenses = 17 * $105,000 = $1,oso for $160,000 & Miscellaneous administrative an = 12 * $ 160,000 = $1,600

Customer support expenses = 2% of sales for $105,000 & Customer support expenses a 2% x $105,000 = $2,100 for $130,000? Customer support expenses 2% x $ 130,000 = $2,600 for $ 160,000 . Cuptomer support expenses & 22 x $160,000 - $3,200