Question

The selling and administrative expense budget of Breckinridge Corporation is based on budgeted unit

sales, which are 5,500 units for June. The variable selling and administrative expense is $1.00 per
unit. The budgeted fixed selling and administrative expense is $101,200 per month, which includes
depreciation of $6,050 per month. The remainder of the fixed selling and administrative expense
represents current cash flows. The cash disbursements for selling and administrative expenses on the June
selling and administrative expense budget should be:
A. $100,650
B. $106,700
C. $5,500
D. $95,150

Answer 1

The cash disbursements for selling and administrative expenses on the June budget should be $100,650.

Step-by-step explanation:

The cash disbursements for selling and administrative expenses on the June budget should be $100,650.

The variable selling and administrative expense is calculated by multiplying the budgeted unit sales (5,500 units) by the variable cost per unit ($1.00). This gives us a total of $5,500 ($1.00 x 5,500).

The budgeted fixed selling and administrative expense is $101,200 per month, which includes depreciation. Since depreciation is a non-cash expense, it is not included in the cash disbursements. Therefore, we subtract the depreciation cost of $6,050 from the total fixed expense ($101,200 - $6,050 = $95,150).

To calculate the cash disbursements, we add the variable expense ($5,500) to the remaining fixed expense ($95,150), resulting in $100,650.