Question

The Puyer Corporation makes and sells only one product called a Deb. The company is in the process of preparing its Selling and Administrative Expense Budget for next year. The following budget data are available: Monthly Fixed Cost Variable Cost Per Deb Sold Sales commissions $ 0.91 Shipping $ 1.41 Advertising $ 50,100 $ 0.21 Executive salaries $ 60,100 Depreciation on office equipment $ 20,100 Other $ 40,100 All of these expenses (except depreciation) are paid in cash in the month they are incurred. If the company has budgeted to sell 15,100 Debs in February, then the total budgeted fixed selling and administrative expenses for February is:a.$130,000
b.$120,000
c.$150,000
d.$170,000

Answer 1

Answer:

The total budgeted fixed selling and administrative expenses for February is $170,400.  The answer is D.

The calculation is as follows:

a) Advertising -  $50,100

b) Executive Salaries -$60,100

c) Depreciation - $20,100

d) Others - $40,100

Total = $170,400.

Explanation:

To obtain the above answer, we add up all the budgeted fixed selling and administrative expenses, excluding variable elements.

Fixed costs are costs which do not vary according to the level of production or activity.

Since the other elements of cost, e.g sales commision, shipping, and part of advertising are variable, these are excluded in getting the fixed selling and administrative expenses.