Question

​Pearl, Inc. has prepared the operating budget for the first quarter of the year. The company forecast sales of $ 40 comma 000 in​ January, $ 50 comma 000 in​ February, and $ 60 comma 000 in March. 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 comma 000 per month Rent​ expense: $ 5 comma 000 per month Depreciation​ expense: $ 1 comma 200 per month Power​ cost/fixed portion: $ 800 per month Miscellaneous​ expenses/fixed portion: $ 1 comma 200 per month Calculate total budgeted selling and administrative expenses for the month of January. A. $ 32 comma 200 B. $ 39 comma 200 C. $ 35 comma 700 D. $ 14 comma 000 g

Answer 1

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

Answer 2

Answer: A. $32,200

Explanation:

The following details are are applicable to the month of January ;

Fixed expenses:

Rent = $5,000

Salary = $10,000

depreciation = $1,200

Fixed Miscellaneous = $1,200

Fixed power = $800

Total fixed expenses = $5,000 + $10,000 + $1,200 + $1,200 + $800 = $18,200

Forecasted January sale = $40,000

Variable expenses:

Power = 30% of sales = 0.3 × $40,000 = $12,000

Miscellaneous = 5% of sales = 0.05 × $40,000 = $2000

Total variable expenses = $12,000 + $2000 = $14,000

Therefore, total selling and administrative expenses for january is given by;

Selling expenses(total variable expenses) + administrative expenses( total fixed expenses)

= $18,200 + $14,000 = $32,200