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 10% of sales Advertising expense 17% of sales Miscellaneous administrative expense $8,000 per month plus 4% of sales Office salaries expense $53,000 per month Customer support expenses $22,000 per month plus 28% of sales Research and development expense $78,000 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, $900,000, 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 $900,000 $1,200,000 Variable cost: $fill in the blank 3 $fill in the blank 4 $fill in the blank 5 fill in the blank 7 fill in the blank 8 fill in the blank 9 fill in the blank 11 fill in the blank 12 fill in the blank 13 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: $fill in the blank 22 $fill in the blank 23 $fill in the blank 24 fill in the blank 26 fill in the blank 27 fill in the blank 28 fill in the blank 30 fill in the blank 31 fill in the blank 32 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
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 10% of sales Advertising expense 17% of sales Miscellaneous administrative expense $8,000 per month plus 4% of sales Office salaries expense $53,000 per month Customer support expenses $22,000 per month plus 28% of sales Research and development expense $78,000 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, $900,000, 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 $900,000 $1,200,000 Variable cost: $fill in the blank 3 $fill in the blank 4 $fill in the blank 5 fill in the blank 7 fill in the blank 8 fill in the blank 9 fill in the blank 11 fill in the blank 12 fill in the blank 13 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: $fill in the blank 22 $fill in the blank 23 $fill in the blank 24 fill in the blank 26 fill in the blank 27 fill in the blank 28 fill in the blank 30 fill in the blank 31 fill in the blank 32 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
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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 | 10% of sales |
| Advertising expense | 17% of sales |
| Miscellaneous administrative expense | $8,000 per month plus 4% of sales |
| Office salaries expense | $53,000 per month |
| Customer support expenses | $22,000 per month plus 28% of sales |
| Research and development expense | $78,000 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.
Prepare a flexible selling and administrative expenses budget for October for sales volumes of $400,000, $900,000, 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 | $900,000 | $1,200,000 |
| Variable cost: | |||
|
|
$fill in the blank 3 | $fill in the blank 4 | $fill in the blank 5 |
|
|
fill in the blank 7 | fill in the blank 8 | fill in the blank 9 |
|
|
fill in the blank 11 | fill in the blank 12 | fill in the blank 13 |
|
|
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: | |||
|
|
$fill in the blank 22 | $fill in the blank 23 | $fill in the blank 24 |
|
|
fill in the blank 26 | fill in the blank 27 | fill in the blank 28 |
|
|
fill in the blank 30 | fill in the blank 31 | fill in the blank 32 |
|
|
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 |
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