Question

At Karle SARL the monthly foxed selling and administrative expenses are $886,000 and the variable selling and administrative expenses afe $4 per unit sold. Except for depreciation of $44,300, these are all current cash outlays. If the budgeted sales amount for February is 4,100 units, what should the February selling and administrative expense budget show for cash disbursements for selling and adminstrative expenses?

Answer 1

The cash disbursements for selling and administrative expenses at Karle SARL in February would be $858,100, calculated by summing the fixed expenses and the variable expenses per unit while excluding the non-cash expense of depreciation.

Step-by-step explanation:

The student is asking about calculating the cash disbursements for selling and administrative expenses in a budget. Since depreciation is not an immediate cash outlay, it is subtracted from the total fixed expenses. The fixed selling and administrative expenses are $886,000, and the variable expense is $4 per unit.

Given that Karle SARL expects to sell 4,100 units in February, the variable expenses would amount to $4 multiplied by 4,100 units, equating to $16,400. The total selling and administrative expense for February would then be $886,000 plus $16,400, which equals $902,400. However, since depreciation does not count towards cash disbursements, we subtract the monthly depreciation of $44,300 to find the total cash disbursements for selling and administrative expenses, resulting in $858,100 for February.