Question

Warshaw Company is preparing the June Budget. The June budget includes the following data: Sales $100,000 Purchases of Merchandise $95,000 Depreciation of office equipment in Accounting Department $2,615 Insurance $11,544 Payroll expenses $5,722 a month plus 2% of sales (for sales and administrative personnel) Administrative office expenses incurred to order purchases are budgeted at 4% of purchases of merchandise only Purchase of equipment $3,537 Research and Development 8% of sales What is total operating expense for June? (hint: not everything listed is an operating expense)

Answer 1

$33,681

Step-by-step explanation:

According to the scenario, computation of the given data are as follows,

Operating Expense for June = Depreciation+ Insurance+Payroll expense+ Admin Expenses +Research and Development expense

Where, Depreciation = $2,615

Insurance expense = $11,544

Payroll expense = $5,722 + ( 2% × $100,000) = $7,722

Admin expense = 4% × $95,000 = $3,800

Research and Development expense = 8% × $100,000 = $8,000

So, Operating Expense for June = $2,615 + $11,544 + $7,722 + $3,800 + $8,000

= $33,681