Question

1. Flexible Budget for Selling and Administrative Expenses for a Service Company

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

   Sales commissions	7% of sales
   Advertising expense	20% of sales
   Miscellaneous administrative expense	$1,850 per month plus 2% of sales
   Office salaries expense	$17,000 per month
   Customer support expenses	$2,600 plus 3% of sales
   Research and development expense	4,600 per month

   Prepare a flexible selling and administrative expenses budget for April for sales volumes of $115,000, $145,000, and $175,000. Enter all amounts as positive numbers.

   Morningside Technologies Inc.
   Flexible Selling and Administrative Expenses Budget
   For the Month Ending April 30
   Total sales	$115,000	$145,000	$175,000
   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
   Total fixed cost	$	$	$
   Total selling and administrative expenses	$	$	$

Answer 1

Morningside Technologies Inc.
Flexible Selling and Administrative Expenses Budget
For the Month Ending April 30
Total sales	$ 1,15,000	$   1,45,000	$ 1,75,000
Variable cost:
Sales commissions	$       8,050	$      10,150	$    12,250
Advertising expense	$     23,000	$      29,000	$    35,000
Miscellaneous administrative expense	$       2,300	$        2,900	$      3,500
Customer support expenses	$       3,450	$        4,350	$      5,250
Total variable cost	$     36,800	$      46,400	$    56,000
Fixed cost:
Miscellaneous administrative expense	$       1,850	$        1,850	$      1,850
Office salaries expense	$     17,000	$      17,000	$    17,000
Customer support expenses	$       2,600	$        2,600	$      2,600
Research and development expense	$       4,600	$        4,600	$      4,600
Total fixed cost	$     26,050	$      26,050	$    26,050
Total selling and administrative expenses	$     62,850	$      72,450	$    82,050