Answer:
Sales volumes <u> $300,000 </u> <u> $350,000 </u> <u> $400,000</u>
Total selling expenses <u> $541,500 </u> <u> $595,750 </u> <u> $650,000 </u>
Explanation:
Basically, a flexible budget can be described as a budget that adjusts with changes in volume or activity.
Therefore, monthly flexible selling expense budget for Cottonwood Company which adjusts with sales volumes can be prepared as follows:
Cottonwood Company
Monthly Flexible Selling Expense Budget
For the Month .....
<u>Details</u><u> $ $ $ </u>
Sales volumes <u> 300,000 </u> <u> 350,000 </u> <u> 400,000</u>
<u>Variable selling expenses:</u>
Sales comm. (6% of sales) 18,000 21,000 24,000
Shipping exp. (1% of sales) 3,000 3,500 4,000
Misc. selling exp. (1.5% of sales) 4,500 5,250 6,000
<u>Fixed selling expenses:</u>
Sales manager's salary 120,000 120,000 120,000
Advertising expense 90,000 90,000 90,000
Misc. selling expense <u> 6,000 </u> <u> 6,000 </u> <u> 6,000 </u>
Total selling expenses <u> 541,500 </u> <u> 595,750 </u> <u> 650,000 </u>
