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 $8\%$ 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 $4$ as a model.$)$

Digital Solutions Inc.

Flexible Selling and Administrative Expenses Budget

For the Month Ending October $31$

Line Item Description Amount Amount Amount

Total sales $$500,000$ $$750,000$ $$1,000,000$

Variable cost:

Sales commissions

$Sales commissions

$Sales commissions

$Sales commissions

Advertising expense

Advertising expense

Advertising expense

Advertising expense

Miscellaneous administrative expense

Miscellaneous administrative expense

Miscellaneous administrative expense

Miscellaneous administrative expense

Customer support expenses

Customer support expenses

Customer support expenses

Customer support expenses

Total variable cost $Total variable cost

$Total variable cost

$Total variable cost

Fixed cost:

Miscellaneous administrative expense

$Miscellaneous administrative expense

$Miscellaneous administrative expense

$Miscellaneous administrative expense

Office salaries expense

Office salaries expense

Office salaries expense

Office salaries expense

Customer support expenses

Customer support expenses

Customer support expenses

Customer support expenses

Research and development expense

Research and development expense

Research and development expense

Research and development expense

Total fixed cost $Total fixed cost

$Total fixed cost

$Total fixed cost

Total selling and administrative expenses $Total selling and administrative expenses

$Total selling and administrative expenses

$Total selling and administrative expenses