Question

Cooke Company incurs $4 per unit of variable selling and administrative expense and $50,000 per month in fixed selling and administrative expense. Of the fixed expense, $12,000 relates to depreciation each month. Selling and administrative expense is paid in the month incurred. During February 2011, Cooke produced 50,000 units and sold 48,000 units. What amount would Cooke include for selling and administrative expense on its February income statement?
a. $250,000
b. $238,000
c. $242,000
d. $230,000

Answer 1

Answer:

Selling and administrative expense = $242000

so correct option is c. $242,000

Explanation:

given data

variable selling and administrative expense = $4 per unit

fixed selling and administrative expense = $50,000 per month

depreciation = $12,000

Cooke produced = 50,000 units

sold = 48,000 units

to find out

What amount would Cooke include for selling and administrative expense

solution

we get here variable selling and administrative expense will be here as

Variable selling and administrative expense  = variable selling and administrative expense × sold   ...................1

put here value we get

Variable selling and administrative expense  = $48000 × $4

Variable selling and administrative expense = $192000

and Fixed selling and administrative expense is = 50000  

Selling and administrative expense  income statement is

Selling and administrative expense = $192000 + $50000

Selling and administrative expense = $242000

so correct option is c. $242,000