Cloud Productivity Inc. uses flexible budgets that are based on the following data: Sales commissions 14% of sales Advertising expense 18% of sales Miscellaneous administrative expense $8,000 per month plus 12% of sales Office salaries expense $29,000 per month Customer support expenses $14,000 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 of $400,000, $500,000, and $600,000
Cloud Productivity Inc. uses flexible budgets that are based on the following data: Sales commissions 14% of sales Advertising expense 18% of sales Miscellaneous administrative expense $8,000 per month plus 12% of sales Office salaries expense $29,000 per month Customer support expenses $14,000 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 of $400,000, $500,000, and $600,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 | 14% of sales |
| Advertising expense | 18% of sales |
| Miscellaneous administrative expense | $8,000 per month plus 12% of sales |
| Office salaries expense | $29,000 per month |
| Customer support expenses | $14,000 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 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: | |||
| 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 | $ | $ | $ |
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