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Flexible Budget for Selling and Administrative Expenses for a Service Company Morningside Technologies Inc

Accounting

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 10% of sales
Advertising expense 20% of sales
Miscellaneous administrative expense $1,500 per month plus 2% of sales
Office salaries expense $14,000 per month
Customer support expenses $2,150 plus 3% of sales
Research and development expense 3,800 per month

Prepare a flexible selling and administrative expenses budget for April for sales volumes of $95,000, $120,000, and $145,000. Enter all amounts as positive numbers.

Morningside Technologies Inc.
Flexible Selling and Administrative Expenses Budget
For the Month Ending April 30
Total sales $95,000 $120,000 $145,000
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 $ $ $

2. Schedule of Cash Collections of Accounts Receivable

Furry Friends Supplies Inc., a pet wholesale supplier, was organized on May 1. Projected sales for each of the first three months of operations are as follows:

May $300,000
June 440,000
July 660,000

All sales are on account. 56 percent of sales are expected to be collected in the month of the sale, 32% in the month following the sale, and the remainder in the second month following the sale.

Prepare a schedule indicating cash collections from sales for May, June, and July.

Furry Friends Supplies Inc.
Schedule of Collections from Sales
For the Three Months Ending May 31
  May June July
May sales on account:      
Collected in May      
Collected in June      
Collected in July      
June sales on account:      
Collected in June      
Collected in July      
July sales on account:      
Collected in July      
Total cash collected $ $ $

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1 Morningside Technologies Inc.
  Flexible Selling and Administrative Expenses Budget
  For the Month Ending April 30
  Total sales $95,000 $120,000 $145,000
  Variable cost:      
  Sales commissions        9,500        12,000        14,500
  Advertising expense      19,000        24,000        29,000
  Miscellaneous administrative expense        1,900          2,400          2,900
  Customer support expenses        2,850          3,600          4,350
  Total variable cost      33,250        42,000        50,750
  Fixed cost:      
  Miscellaneous administrative expense        1,500          1,500          1,500
  Office salaries expense      14,000        14,000        14,000
  Customer support expenses        2,150          2,150          2,150
  Research and development expense        3,800          3,800          3,800
  Total fixed cost      21,450        21,450        21,450
  Total selling and administrative expenses      54,700        63,450        72,200
         
         
2 Furry Friends Supplies Inc.
  Schedule of Collections from Sales
  For the Three Months Ending May 31
    May June July
  May sales on account:      
  Collected in May     168,000    
  Collected in June          96,000  
  Collected in July            36,000
  June sales on account:      
  Collected in June        246,400  
  Collected in July          140,800
  July sales on account:      
  Collected in July          369,600
  Total cash collected     168,000      342,400      546,400