Question

Nutcracker, Inc has forecast sales for the next three months as follows: July 4,000 units, August 6,000 units, September 7,500 units. Nutcracker's policy is to have an ending inventory of 40% of the next month's sales needs on hand. July 1 inventory is projected to be 1,500 units. Selling and administrative costs are budgeted to be $15,000 per month plus $5 per unit sold. What are budgeted selling and administrative expenses for July

Answer 1

Answer:

$35,000

Explanation:

Use the provided cost formula :

Selling and administrative expense = $15,000 + $5y

where,

y is the number of units sold

Therefore,

Selling and administrative expense = $15,000 + $5 x 4,000 units

                                                            = $35,000