Flexible budget for selling and administrative expenses for a service company Social Media Inc. uses flexible budgets that are based on the following data: Sales commissions ............................................................ 15% of sales Advertising expense .......................................................... 20% of sales Miscellaneous administrative expenses ........................... $7,000 per month plus 10% of sales Office salaries expense ..................................................... $35,000 per month Customer support expenses ............................................. $11,000 per month plus 18% sales Research and development expense ................................ $35,000 per month Prepare a flexible selling and administrative expenses budget for June 2016 for sales volume $400,000, $500,000 and $600,000.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Flexible budget for selling and administrative expenses for a service company
Social Media Inc. uses flexible budgets that are based on the following data:
Sales commissions ............................................................ 15% of sales
Advertising expense .......................................................... 20% of sales
Miscellaneous administrative expenses ........................... $7,000 per month plus 10% of sales
Office salaries expense ..................................................... $35,000 per month
Customer support expenses ............................................. $11,000 per month plus 18% sales
Research and development expense ................................ $35,000 per month
Prepare a flexible selling and administrative expenses budget for June 2016 for sales volume $400,000,
$500,000 and $600,000.
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