Question

The selling and administrative expense budget of Ruffing Corporation is based on budgeted unit sales, which are 4,800 units for February. The variable selling and administrative expense is $8.10 per unit. The budgeted fixed selling and administrative expense is $71,520 per month, which includes depreciation of $16,800 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the February selling and administrative expense budget should be:a) $38,880b) $54,720c) $110,400d) $93,600

Answer 1

Answer:

Answer is D $93,600

Explanation:

The question is about cash disbursements for this item

According to the information the monthly expenses are of

$71,520

but within which are depreciation expenses, which do not mean a cash outlay, for 16,800

On the other hand it is necessary to add the variable expenses of the selling and administrative expenses for this month, that correspond to 4,800 units for $ 8.10 of cost = 38,880

So

+71,520 Fixed expenses

-16,800 Non-cash expenses

+38,880 Variable expenses

=$93,600 cash disbursements for selling and administrative expenses on  February