Question

Bee Company is a honey wholesaler. An income statement and other data for the second quarter of the year are given below: Bee Company Income Statement For the Quarter Ended June 30 Sales $ 960,000 Cost of goods sold 420,000 Gross margin 540,000 Selling and administrative expenses: Selling $ 200,000 Administrative 75,000 275,000 Net operating income $ 265,000 Other data: Average selling price $60 per unit Selling expenses Fixed selling expenses plus 8% of sales Administrative expense Fixed administrative expenses plus $2 per unit Bee Company's cost formula for total selling and administrative expenses, with "X" equal to the number of units sold would be: Multiple Choice Y = $123,200 + $4.80X Y = $123,200 + $6.80X Y = $275,000 + $4.80X Y = $166,200 + $6.80X

Answer 1

Answer:

selling and administrative cost formula:

Y = $166,200 + $6.80X

Explanation:

First we solve for the units sold during hte period:

sales: 960,000

unit selling price: 60

units sold: 960,000 / 60 = 16,000

Then we calcualte the variable cost of both, selling and administrative:

selling variable 8% of selling 8% of $60 = 4.8

administrative $ 2

total variable: 6.8

Now we solve for fixed cost:

275,000 = 6.8 (16,000) + fixed

fixed = 275,000 - 108,800 = 166,200