Asked by Justin Brady on Jun 15, 2024
Verified
Schuepfer Incorporated bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 1,300 units are planned to be sold in March. The variable selling and administrative expense is $4.20 per unit. The budgeted fixed selling and administrative expense is $19,240 per month, which includes depreciation of $3,380 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 March selling and administrative expense budget should be:
A) $15,860
B) $5,460
C) $24,700
D) $21,320
Selling and Administrative Expense
Costs indirectly related to the production of goods or services, including marketing, management, and office expenses.
Budgeted Unit Sales
The projected number of units that a company expects to sell over a specific period, as included in its budget.
Depreciation
A method of allocating the cost of a tangible asset over its useful life.
- Analyze the components of a selling and administrative expense budget and understand its impact on cash flow.
Verified Answer
KS
Kentasha StayprayedupJun 19, 2024
Final Answer :
D
Explanation :
Variable selling and administrative expenses = $4.20 x 1,300 = $5,460
Fixed selling and administrative expenses = $19,240 - $3,380 = $15,860
Total cash disbursements = Variable selling and administrative expenses + Fixed selling and administrative expenses = $5,460 + $15,860 = $21,320. Therefore, the answer is D.
Fixed selling and administrative expenses = $19,240 - $3,380 = $15,860
Total cash disbursements = Variable selling and administrative expenses + Fixed selling and administrative expenses = $5,460 + $15,860 = $21,320. Therefore, the answer is D.
Learning Objectives
- Analyze the components of a selling and administrative expense budget and understand its impact on cash flow.