Question

Zelia, Inc. has prepared the operating budget for the first quarter of the year. The company forecast sales of $40,000 in January, $50,000 in February, and $60,000 in March. Variable and fixed expenses are as follows: Variable Expenses: Power cost (40% of sales) Miscellaneous expenses: (15% of sales) Fixed Expenses: Salaries expense: $6000 per month Rent expense: $5000 per month Depreciation expense: $1400 per month Power cost/fixed portion: $600 per month Miscellaneous expenses/fixed portion: $1200 per month Using the information above, calculate the amount of budgeted selling and administrative expenses for the month of February.

Answer 1

$41,700

Step-by-step explanation:

The computation of the amount of budgeted selling and administrative expenses for the month of February is shown below:

= Variable Expenses power cost + Miscellaneous expenses + Salaries expense + Rent expense + Depreciation expense + Power cost/fixed portion + Miscellaneous expenses/fixed portion

where,

Variable Expenses power cost = $50,000 × 40% = $20,000

And, the Miscellaneous expenses = $50,000 × 15% = $7,500

All other items values would remain the same

Now put these values to the above formula

So, the value would equal to

= $20,000 + $7,500 + $6,000 + $5,000 + $1,400 + $600 + $1,200

= $41,700