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 $ 0.95 Shipping $ 1.45 Advertising $ 50,500 $ 0.25 Executive salaries $ 60,500 Depreciation on office equipment $ 20,500 Other $ 40,500 All of these expenses (except depreciation) are paid in cash in the month they are incurred. If the company has budgeted to sell 15,500 Debs in February, then the total budgeted fixed selling and administrative expenses for February is:

Answer 1

Answer: $172,000

Explanation:

Its a little bit of a trick question throwing in the Debs that they want to sell for the month.

That figure is irrelevant because we are dealing with fixed costs so the company will still incur them regardless of what they sell.

The components of total budgeted fixed selling and administrative expenses are,

Advertising

Executive Salaries

Depreciation on office equipment and,

Others

Those are the only figures that should concern you. Adding them up would give us,

= 50,500 + 60,500 + 20,500 + 40,500

= $172,000

The total budgeted fixed selling and administrative expenses for February is $172,000