1. Digital Solutions Inc. uses flexible budgets that are based on the following data:

Sales commissions	15% of sales
Advertising expense	18% of sales
Miscellaneous administrative expense	$8,500 per month plus 12% of sales
Office salaries expense	$30,000 per month
Customer support expenses	$13,000 per month plus 20% of sales
Research and development expense	$32,000 per month

Prepare a flexible selling and administrative expenses budget for October for sales volumes of $400,000, $500,000, and $600,000. (Use Exhibit 5 as a model.)

2.

Healthy Measures Inc. produces a Bath and Gym version of its popular electronic scale. The anticipated unit sales for the scales by sales region are as follows:

	Bath Scale		Gym Scale
Northern Region unit sales	23,900		40,000
Southern Region unit sales	25,800		27,100
Total	49,700		67,100

The finished goods inventory estimated for March 1, for the Bath and Gym scale models is 1,600 and 2,200 units, respectively. The desired finished goods inventory for March 31 for the Bath and Gym scale models is 1,200 and 2,400 units, respectively.

Prepare a production budget for the Bath and Gym scales for the month ended March 31. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

4.

Pet Supplies Inc., a pet wholesale supplier, was organized on January 1. Projected sales for each of the first three months of operations are as follows:

January	$330,000
February	490,000
March	680,000

All sales are on account. 54% of sales are expected to be collected in the month of the sale, 41% in the month following the sale, and the remainder in the second month following the sale.

Prepare a schedule indicating cash collections from sales for January, February, and March.