Mort schmitt has a cafeteria plan that contains long-term disability insurance, medical expense insurance for himself (he has no
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Answer:
The cash disbursements for selling and administrative expenses should be $45,520
Explanation:
The selling and administrative (S&A) expenses have two parts: a variable one and a fixed one.
- The variable part depends on how many units have been sold. So, if the variable S&A expense per unit is $4.1, and 3,600 units are planned to be sold, the total variable S&A expense should be
- The fixed part does not depend on the units sold. It remains the same no matter how many units have been sold. Yet, it includes depreciation of $5,100. The depreciation does not represent an exit of money. It isn't part of the cash flow. So, the total fixed S&A expenses should be
- Finally, the total S&A expenses should be