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 Advertising expense Miscellaneous administrative expense 7% of sales 15% of sales $11,000 per month plus 6% of sales $46,000 per month Office salaries expense Customer support expenses $22,000 per month plus 31% of sales Research and development expense $79,000 per month This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below. Open spreadsheet Prepare a flexible selling and administrative expenses budget for October for sales volumes of $400,000, $800,000, and $1,000,000. (Use Exhibit 5 as a model.) Enter all amounts as positive numbers. Digital Solutions Inc. Flexible Selling and Administrative Expenses Budget For the Month Ending October 31 $400,000 $800,000 $1,000,000 Total sales Variable cost: Check My Work 2 more Check My Work uses remaining. < Previous Next)

Answer 1

Answer

Flexible Selling and Administrative Expenses Budget
For the Month Ending October 31
Total sales	$400,000	$800,000	$1,000,000
Variable cost:
Sales commissions	$28,000	$56,000	$70,000
Advertising expense	$60,000	$120,000	$150,000
Miscellaneous administrative expense	$24,000	$48,000	$60,000
Customer support expenses	$124,000	$248,000	$310,000
Total variable cost	$236,000	$472,000	$590,000
Fixed cost:
Miscellaneous administrative expense	$11,000	$11,000	$11,000
Office salaries expense	$46,000	$46,000	$46,000
Customer support expenses	$22,000	$22,000	$22,000
Research and development expense	$79,000	$79,000	$79,000
Total fixed cost	$158,000	$158,000	$158,000
Total selling and administrative expenses	$394,000	$630,000	$748,000

--Working for Variable costs

Total sales	400000	800000	1000000
Variable cost:
Sales commissions	=400000*7%	=800000*7%	=1000000*7%
Advertising expense	=400000*15%	=800000*15%	=1000000*15%
Miscellaneous administrative expense	=400000*6%	=800000*6%	=1000000*6%
Customer support expenses	=400000*31%	=800000*31%	=1000000*31%