Question

Schuepfer Inc. bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 1,300 units are planned to be sold in March. The variable selling and administrative expense is $4.20 per unit. The budgeted fixed selling and administrative expense is $19,240 per month, which includes depreciation of $3,380 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 March selling and administrative expense budget should be:
a. $15,860
b. $5,460
c. $24,700
d. $21,320

Answer 1

Answer:

Total expending 21,320

Explanation:

Assuming the administrative expense are also paid on cash during the period

1,300 units x $4.20 = 5,460 Variable expending

19,240 fixed cost - 3,380 depreciation (non-monetary) = 15,860 Fixed expending

Total expending 5,460 + 15,860 = 21,320

Remember:

Depreciation and amortization are non-monetary term, they don't involve a cash disbursement.