1. 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	16% of sales
   Miscellaneous administrative expense	$12,000 per month plus 5% of sales
   Office salaries expense	$49,000 per month
   Customer support expenses	$18,000 per month plus 29% of sales
   Research and development expense	$71,000 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 $500,000, $900,000, 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		$900,000		$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		$fill in the blank 40		$fill in the blank 41		$fill in the blank 42