Answer:
Digital Solutions Inc.
Selling and Administrative Expenses Budget for October:
Sales volumes $500,000 $750,000 $1,000,000
Selling expenses:
Sales commissions 6% $30,000 $45,000 $60,000
Advertising expense 14% 70,000 105,000 140,000
Customer support expenses:
Fixed 18,000 18,000 18,000
Variable 32% of sales 160,000 240,000 320,000
Total selling expenses $278,000 $408,000 $538,000
Administrative expenses:
Miscellaneous administrative expense:
Fixed 8,500 8,500 8,500
Variable 5% of sales 25,000 37,500 50,000
Office salaries expense 54,000 54,000 54,000
Research and
development expense 75,000 75,000 75,000
Total administrative exp. $162,500 $175,000 $187,500
Total $440,500 $583,000 $725,500
Explanation:
a) Data and Calculations:
Sales commissions 6% of sales
Advertising expense 14% of sales
Miscellaneous administrative expense $8,500 per month plus 5% of sales
Office salaries expense $54,000 per month
Customer support expenses $18,000 per month plus 32% of sales
Research and development expense $75,000 per month
Sales volumes of $500,000, $750,000, and $1,000,000
Sales volumes $500,000 $750,000 $1,000,000
Selling and administrative expenses:
Sales commissions 6% $30,000 $45,000 $60,000
Advertising expense 14% 70,000 105,000 140,000
Miscellaneous administrative expense:
Fixed 8,500 8,500 8,500
Variable 5% of sales 25,000 37,500 50,000
Office salaries expense 54,000 54,000 54,000
Customer support expenses:
Fixed 18,000 18,000 18,000
Variable 32% of sales 160,000 240,000 320,000
Research and
development expense 75,000 75,000 75,000
Total $440,500 $583,000 $725,500
