Question

Karma Company has prepared its operating budget for the first quarter of 20x9. The company forecasts sales of $50,000 in February, $60,000 in March, and $70,000 in April. Variable and fixed expenses are as follows: Variable: Utilities (electricity): 40 % of sales Misc. expenses: 5 % of sales Fixed: Salary expense $ 8,000 per month Rent expense $ 5,000 per month Depreciation expense $ 1,200 per month Utilities expense (fixed part) $ 800 per month Misc. Expense (fixed part) $ 1,000 per month What are the total selling and administrative expenses for the month of February

Answer 1

Answer:

The correct solution is "38,500".

Explanation:

The given values are:

Sales in February,

= $50,000

Sales in March,

= $60,000

Sales in April,

= $70,000

Now,

The total selling and administrative expenses for the month of February will be:

=  $Variable \ costs + Fixed \ cos ts$

On substituting the values, we get

=  $50,000\times (40 \ percent+5 \ percent) + (8,00 0+5,000+1,200+800+1,000)$

=  $20000+2500+8000+5000+1200+800+1000$

=  $38,500$