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	13% of sales
Miscellaneous administrative expense	$8,000 per month plus 4% of sales
Office salaries expense	$45,000 per month
Customer support expenses	$15,000 per month plus 31% of sales
Research and development expense	$79,000 per month

Prepare a flexible selling and administrative expenses budget for October for sales volumes of $500,000, $700,000, and $1,200,000. (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
Total sales	$500,000		$700,000		$1,200,000
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		$		$		$

Answer 1