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 Office salaries expense $50,000 per month Customer support expenses $20,000 per month plus 30% of sales Research and development expense $75,000 per month 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.)

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Chapter7: Budgeting
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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
Office salaries expense $50,000 per month
Customer support expenses $20,000 per month plus 30% of sales
Research and development expense $75,000 per month

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.)

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
Office salaries expense
$50,000 per month
Customer support expenses
$20,000 per month plus 30% of sales
Research and development expense
$75,000 per month
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 v
40,000
60,000
80,000
Advertising expense v
75,000
112,500
150,000
Miscellaneous administrative expense v
Customer support expenses
Total variable cost
Fixed cost:
Miscellaneous administrative expense
$4
Office salaries expense v
Customer support expenses v
Research and development expense
Total fixed cost
Total selling and administrative expenses
Transcribed Image Text: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 Office salaries expense $50,000 per month Customer support expenses $20,000 per month plus 30% of sales Research and development expense $75,000 per month 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 v 40,000 60,000 80,000 Advertising expense v 75,000 112,500 150,000 Miscellaneous administrative expense v Customer support expenses Total variable cost Fixed cost: Miscellaneous administrative expense $4 Office salaries expense v Customer support expenses v Research and development expense Total fixed cost Total selling and administrative expenses
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