Answer:
The correct answer is A.
Explanation:
Giving the following information:
The company forecast sales:
January= $40,000
Variable and fixed selling and administrative expenses are as follows:
Variable Expenses:
Power cost (30% of sales)
Miscellaneous expenses: (5% of sales)
Fixed Expenses:
Salaries expense= $10,000 per month
Rent expense: $5,000 per month
Depreciation expense: $1,200 per month
Power cost/fixed portion: $800 per month
Miscellaneous expenses/fixed portion: $1,200 per month
Total= $18,200
For January
Total variable cost= 40,000*0.3 + 40,000*0.05= $14,000
Total fixed cost= 18,200
Total cost= $32,200
