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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:

Line Item Description	Value
Sales commissions	9% of sales
Advertising expense	16% of sales
Miscellaneous administrative expense	$11,000 per month plus 5% of sales
Office salaries expense	$52,000 per month
Customer support expenses	$24,000 per month plus 31% of sales
Research and development expense	$74,000 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, $700,000, and $1,200,000. (Use Exhibit 4 as a model.) Enter all amounts as positive numbers.

Line Item Description	Amount	Amount	Amount
Total sales	$400,000	$700,000	$1,200,000
Variable cost:
CashOffice salaries expenseSales commissionsSupplies expenseWages expense	$fill in the blank 3	$fill in the blank 4	$fill in the blank 5
Advertising expenseCashOffice salaries expenseSupplies expenseWages expense	fill in the blank 7	fill in the blank 8	fill in the blank 9
Miscellaneous administrative expenseOffice salaries expensePrepaid insuranceRent expenseWages expense	fill in the blank 11	fill in the blank 12	fill in the blank 13
Customer support expensesRent expenseResearch and development expenseSupplies expenseWages expense	fill in the blank 15	fill in the blank 16	fill in the blank 17
Total variable cost	$fill in the blank 18	$fill in the blank 19	$fill in the blank 20
Fixed cost:
Insurance expenseMiscellaneous administrative expenseRent expenseSupplies expenseWages expense	$fill in the blank 22	$fill in the blank 23	$fill in the blank 24
Insurance expenseOffice salaries expensePrepaid insuranceRent expenseWages expense	fill in the blank 26	fill in the blank 27	fill in the blank 28
Customer support expensesInsurance expenseRent expenseSupplies expenseWages expense	fill in the blank 30	fill in the blank 31	fill in the blank 32
Insurance expenseRent expenseResearch and development expenseSupplies expenseWages expense	fill in the blank 34	fill in the blank 35	fill in the blank 36
Total fixed cost	$fill in the blank 37	$fill in the blank 38	$fill in the blank 39
Total selling and administrative expenses