Question

Kirkland Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first 6 months of 2017, the following data are available.
1. Sales: 20,000 units quarter 1; 22,000 units quarter 2.
2. Variable costs per dollar of sales: sales commissions 5%, delivery expense 2%, and advertising 3%.
3. Fixed costs per quarter: sales salaries $10,700, office salaries $6,480, depreciation $4,520, insurance $1,990, utilities $900, and repairs expense $650.
4. Unit selling price: $25.
Prepare a selling and administrative expense budget by quarters for the first 6 months of 2017.

Answer 1

Answer:

Budgeted Selling and Administrative Expense are:

Quarter 1 = $75,240

Quarter 2 = $80,240

Six Months = $155,480

Explanation:

Note: See the attached excel file for the selling and administrative expense budget by quarters for the first 6 months of 2017.

In the attached excel file, the following calculations is done:

Quarter 1 sales revenue = Quarter 1 units * Unit selling price = 20,000 * $25 = $500,000

Quarter 2 sales revenue = Quarter 2 units * Unit selling price = 22,000 * $25 = $550,000

From the attached excel file, Budgeted Selling and Administrative Expense are:

Quarter 1 = $75,240

Quarter 2 = $80,240

Six Months = $155,480

Download xlsx