Question

Elbert Company classifies its selling and administrative expense budget into variable and fixed components. Variable expenses are expected to be $25,220 in the first quarter, and $5,190 increments are expected in the remaining quarters of 2017. Fixed expenses are expected to be $40,680 in each quarter. Prepare the selling and administrative expense budget by quarters and in total for 2017.

Answer 1

Step-by-step explanation:

Variable Expense : The variable expense is that expense which is change when production level changes. Example - Direct material, labor , overhead, etc.

Fixed Expense : The fixed expense remains the same whether production level increase or decrease. Example - Rent, depreciation, etc.

As in the given equation, the fixed expense remain same in all four quarters. But the variable expenses changes.

In first quarter, it is $25,220 after that it increase by $5190 for respective quarters

The calculation is given in attachment with formulas and computation.

The display is given below: