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 $9,000 per month plus 12% of sales Office salaries expense $29,000 per month Customer support expenses $13,000 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 Chad repare a flexible selling and administrative expenses budget for March for sales volume 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 Quod Customer support expenses Total variable cost Fixed cost: Miscellaneous administrative expense Count) 0.0 Office salaries expense Customer support expenses Research and development expense Total fixed cost Total selling and administrative expenses Static Budget versus Flexible Budget The production supervisor of the Machining Department for Niland Company agreed to the following monthly static budget for the upcoming year: Niland Company Machining Department Monthly Production Budget Wages $677,000 Utilities 37,000 Depreciation 62,000 Total $776,000 The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows: Amount Spent Units Produced January $732,000 113,000 February 699,000 103,000 March 668,000 93,000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for January-March have been significantly less than the monthly static budget of 776,000. However, the plant manager believes that the budget should not remain fixed for every month but should "flex" or adjust to the volume of work that is produced in the Machining Department. Additional budget Information for the Machining Department is as follows: information for the Machining Department is as follows: Wages per hour $22 Utility cost per direct labor hour $1.2 Direct labor hours per unit 0.25 Planned monthly unit production 124,000 a. Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department. Assume depreciation is a fixed cost. If required, use per unit amounts carried out to two decimal places. Niland Company Machining Department Budget For the Three Months Ending March 31 January February March Units of production 113,000 103,000 93,000 Wages Utilities Depreciation Total Supporting calculations: Units of production Hours per unit 113,000 103,000 93,000 Total hours of production 113,000 103,000 93,000 Supporting calculations: Units of production Hours per unit Total hours of production Qa Wages per hour X $ X $ Total wages DO biocido Total hours of production Utility costs per hour X $ Total utilities b. Compare the flexible budget with the actual expenditures for the first three months. January February March Total flexible budget Actual cost Excess of actual cost over budget What does this comparison suggest? The Machining Department has performed better than originally thought. The department is spending more than would be expected. Flexible Budget for Assembly Department Cabinaire Inc. is one of the largest manufacturers of office furniture in the United States. In Grand Rapids, Michigan, it assembles filing cabinets in an Assembly Department. Assume the following information for the Assembly Department: Direct labor per filing cabinet 30 minutes Supervisor salaries $141,000 per month Depreciation $24,000 per month Direct labor rate $24 per hour Prepare a flexible budget for 8,000, 10,000, and 12,000 filing cabinets for the month of March in the Assembly Department similar to Exhibit S. Enter all amounts as positive numbers. Cabinaire Inc. Assembly Department Budget Month Ending March 31 (assumed data) Units of production 8,000 10,000 12,000 Variable cost: Total variable cost Fixed cost 388 Prepare a flexible budget for 8,000, 10,000, and 12,000 filing cabinets for the month of March in the Assembly Department similar to Exhibit 5. Enter all amounts as positive numbers. Cabinaire Inc. Assembly Department Budget Month Ending March 31 (assumed data) Units of production 8,000 10,000 12,000 Variable cost: Total variable cost Fixed cost: IO 2000 Total fixed cost Total department costs