Question

Food King gathered the following information for the fourth quarter of 20X9: Budgeted sales for October $25,000 Monthly Expenses: Salary expense $1,500 Rent expense $1,000 Depreciation expense $400 Sales commissions 10% of sales Advertising expense 8% of sales Miscellaneous expense 5% of sales Monthly sales are expected to increase by 5% each month. Prepare an operating expense budget for the fourth quarter (for three separate months) of 20X9.

Answer 1

Answer and Explanation:

The presentation of the operating expense budget is presented below:

Particulars October November December

Budgeted sales $25,000 $26,250 $27,562.5

($25,000 × 1.05) ($26,250× 1.05)

Salary Expense $1,500 $1,500 $1,500

Rent expense $1,000 $1,000 $1,000

Depreciation

expense $400 $400 $400

Sales Commission $2,500 $2,625 $2,756

($25,000 ×10%) ($26,250 × 10%) ($27,562.50 × 10%)

Advertising expense $2,000 $2,100 $2,205

($25,000 ×8%) ($26,250 × 8%) ($27,562.50 × 8%)

Miscellaneous expense $1,250 $1,312.5 $1,378

($25,000 ×5%) ($26,250 × 5%) ($27,562.50 × 5%)

Total Monthly expenses $8,650 $8,937.5 $9,239