Question

Flexible Budget for Selling and Administrative Expenses for a Service Company Digital Solutions Inc. uses flexible budgets that are based on the following data: Sales commissions 8% of sales Advertising expense 15% of sales Miscellaneous administrative expense $10,000 per month plus 4% of sales $50,000 per month Office salaries expense Customer support expenses $20,000 per month plus 30% of sales $75,000 per month Research and development expense Prepare a flexible selling and administrative expenses budget for October for sales volumes of $500,000, $750,000, and $1,000,000. (Use Exhibit 5 as a model.) Digital Solutions Inc. Flexible Selling and Administrative Expenses Budget For the Month Ending October 31 Total sales $500,000 $750,000 $1,000,000 Variable cost: Sales commissions Advertising expense Miscellaneous administrative expense Customer support expenses Total variable cost

Answer 1

Flexible Selling and Administrative Expenses Budget
For the Month Ending October 31
Total sales	500000	750000	1000000
Variable cost:
Sales commissions	40000	60000	80000
Advertising expense	75000	112500	150000
Miscellaneous administrative expense	20000	30000	40000
Customer support expenses	150000	225000	300000
Total variable cost	285000	427500	570000
Fixed cost:
Miscellaneous administrative expense	10000	10000	10000
Office salaries expense	50000	50000	50000
Customer support expenses	20000	20000	20000
Research and development expense	75000	75000	75000
Total fixed cost	155000	155000	155000
Total selling and administrative expenses	440000	582500	725000