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 15% of sales Advertising expense 12% of sales Miscellaneous administrative expense $8,000 per month plus 10% of sales Office salaries expense $32,000 per month Customer support expenses $14,000 per month plus 18% of sales Research and development expense $35,000 per month
Prepare a flexible selling and administrative expenses budget for April for sales volumes of $400,000, $500,000, and $600,000.
MORNINGSIDE TECHNOLOGIES INC. Flexible Selling and Administrative Expenses Budget For the Month Ending April 30 Total sales $400,000 $500,000 $600,000 Variable cost: Sales commissions $ $ $ Advertising expense Miscellaneous administrative expense Customer support expense Total variable cost $ $ $ Fixed cost: Miscellaneous administrative expense $ $ $ Office salaries expense Customer support expense Research and development expense Total fixed cost $ $ $ Total selling and administrative expenses $ $ $
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 | 15% of sales |
| Advertising expense | 12% of sales |
| Miscellaneous administrative expense | $8,000 per month plus 10% of sales |
| Office salaries expense | $32,000 per month |
| Customer support expenses | $14,000 per month plus 18% of sales |
| Research and development expense | $35,000 per month |
Prepare a flexible selling and administrative expenses budget for April for sales volumes of $400,000, $500,000, and $600,000.
| MORNINGSIDE TECHNOLOGIES INC. | |||
| Flexible Selling and Administrative Expenses Budget | |||
| For the Month Ending April 30 | |||
| Total sales | $400,000 | $500,000 | $600,000 |
| Variable cost: | |||
| Sales commissions | $ | $ | $ |
| Advertising expense | |||
| Miscellaneous administrative expense | |||
| Customer support expense | |||
| Total variable cost | $ | $ | $ |
| Fixed cost: | |||
| Miscellaneous administrative expense | $ | $ | $ |
| Office salaries expense | |||
| Customer support expense | |||
| Research and development expense | |||
| Total fixed cost | $ | $ | $ |
| Total selling and administrative expenses | $ | $ | $ |
Related questions
Flexible Budget for Selling and Administrative Expenses for aService Company
Morningside Technologies Inc. uses flexible budgets that arebased on the following data:
| Sales commissions | 7% of sales |
| Advertising expense | 25% of sales |
| Miscellaneous administrative expense | $1,850 per month plus 3% of sales |
| Office salaries expense | $17,000 per month |
| Customer support expenses | $2,600 plus 4% of sales |
| Research and development expense | 5,750 per month |
Prepare a flexible selling and administrative expenses budgetfor 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 ExpensesBudget | |||
| Forthe Month Ending April 30 | |||
| Total sales | $115,000 | $145,000 | $175,000 |
| Variable cost: | |||
| Sales commissions | $ | $ | $ |
| Advertising expense | |||
| Miscellaneousadministrative expense | |||
| Customer support expense | |||
| Total variable cost | $ | $ | $ |
| Fixed cost: | |||
| Miscellaneous administrative expense | $ | $ | $ |
| Office salaries expense | |||
| Customer support expense | |||
| Research and development expense | |||
| Total fixed cost | $ | $ | $ |
| Total selling and administrativeexpenses | $ | $ | $ |
2.
Sales and Production Budgets
Sonic Inc. manufactures two models of speakers, Rumble andThunder. Based on the following production and sales data for June,prepare (a) a sales budget and (b) a production budget.
| Rumble | Thunder | ||
| Estimated inventory (units), June 1 | 278 | 77 | |
| Desired inventory (units), June 30 | 319 | 67 | |
| Expected sales volume (units): | |||
| East Region | 4,100 | 4,600 | |
| West Region | 5,000 | 4,350 | |
| Unit sales price | $115 | $185 |
a. Prepare a sales budget.
| SonicInc. | |||
| SalesBudget | |||
| Forthe Month Ending June 30 | |||
| Product and Area | Unit Sales Volume | Unit Selling Price | Total Sales |
| Model Rumble: | |||
| East Region | $ | $ | |
| West Region | |||
| Total | $ | ||
| Model Thunder: | |||
| East Region | $ | $ | |
| West Region | |||
| Total | $ | ||
| Total revenue from sales | $ | ||
3.
Cash Budget
The controller of Sonoma Housewares Inc. instructs you toprepare a monthly cash budget for the next three months. You arepresented with the following budget information:
| May | June | July | ||||
| Sales | $90,000 | $111,000 | $142,000 | |||
| Manufacturing costs | 38,000 | 48,000 | 51,000 | |||
| Selling and administrative expenses | 26,000 | 30,000 | 31,000 | |||
| Capital expenditures | _ | _ | 34,000 | |||
The company expects to sell about 10% of its merchandise forcash. Of sales on account, 60% are expected to be collected in themonth following the sale and the remainder the following month(second month following sale). Depreciation, insurance, andproperty tax expense represent $9,000 of the estimated monthlymanufacturing costs. The annual insurance premium is paid inSeptember, and the annual property taxes are paid in November. Ofthe remainder of the manufacturing costs, 75% are expected to bepaid in the month in which they are incurred and the balance in thefollowing month.
Current assets as of May 1 include cash of $34,000, marketablesecurities of $49,000, and accounts receivable of $107,800 ($79,000from April sales and $28,800 from March sales). Sales on accountfor March and April were $72,000 and $79,000, respectively. Currentliabilities as of May 1 include $10,000 of accounts payableincurred in April for manufacturing costs. All selling andadministrative expenses are paid in cash in the period they areincurred. An estimated income tax payment of $13,000 will be madein June. Sonomaâs regular quarterly dividend of $9,000 is expectedto be declared in June and paid in July. Management wants tomaintain a minimum cash balance of $27,000.
Required:
1. Prepare a monthly cash budget and supportingschedules for May, June, and July. Input all amounts as positivevalues except overall cash decrease and deficiency which should beindicated with a minus sign.
| Sonoma Housewares Inc. | |||
| CashBudget | |||
| Forthe Three Months Ending July 31 | |||
| May | June | July | |
| Estimated cash receipts from: | |||
| Cash sales | $ | $ | $ |
| Collection of accounts receivable | |||
| Total cash receipts | $ | $ | $ |
| Estimated cash payments for: | |||
| Manufacturing costs | $ | $ | $ |
| Selling and administrative expenses | |||
| Capital expenditures | |||
| Other purposes: | |||
| Income tax | |||
| Dividends | |||
| Total cash payments | $ | $ | $ |
| Cash increase or (decrease) | $ | $ | $ |
| Cash balance at beginning of month | |||
| Cash balance at end of month | $ | $ | $ |
| Minimum cash balance | |||
| Excess or (deficiency) | $ | $ | $ |
4.
Factory Overhead Cost Budget
Sweet Tooth Company budgeted the following costs for anticipatedproduction for August:
| Advertising expenses | $259,400 |
| Manufacturing supplies | 14,220 |
| Power and light | 42,400 |
| Sales commissions | 290,020 |
| Factory insurance | 24,690 |
| Production supervisor wages | 124,710 |
| Production control wages | 32,420 |
| Executive officer salaries | 264,390 |
| Materials management wages | 35,670 |
| Factory depreciation | 20,210 |
Prepare a factory overhead cost budget, separating variable andfixed costs. Assume that factory insurance and depreciation are theonly fixed factory costs.
| SweetTooth Company | ||
| Factory Overhead Cost Budget | ||
| Forthe Month Ending August 31 | ||
| Variable factory overhead costs: | ||
| Manufacturingsupplies | $ | |
| Power and light | ||
| Production supervisorwages | ||
| Production controlwages | ||
| Materials managementwages | ||
| Total variable factory overhead costs | $ | |
| Fixed factory overhead costs: | ||
| Factory insurance | $ | |
| Factory depreciation | ||
| Total fixed factory overhead costs | ||
| Total factory overhead costs | $ | |
