Asked by Atilla Furkan on May 18, 2024
Verified
Schuepfer Incorporated bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 3,000 units are planned to be sold in March. The variable selling and administrative expense is $3.50 per unit. The budgeted fixed selling and administrative expense is $35,800 per month, which includes depreciation of $4,500 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) $46,300
B) $41,800
C) $31,300
D) $10,500
Variable Selling
Costs that vary depending on the level of sales activity, such as commissions or shipping charges.
Administrative Expense
Expenses incurred by a business that are not directly tied to a specific function such as manufacturing, production, or sales. These can include salaries of executive personnel, accounting fees, and HR services.
Budgeted Fixed Selling
Budgeted fixed selling refers to the predetermined set of expenses associated with selling a product that do not change with sales volume.
- Examine the elements of a selling and administrative expense budget and comprehend its influence on cash flow.
Verified Answer
JP
Jonathan PierreMay 20, 2024
Final Answer :
B
Explanation :
The total selling and administrative expense budget for March can be calculated as follows:
Variable selling and administrative expense = 3,000 units x $3.50 per unit = $10,500
Fixed selling and administrative expense = $35,800 - $4,500 (depreciation) = $31,300
Total selling and administrative expense budget = $10,500 (variable) + $31,300 (fixed) = $41,800
Therefore, the cash disbursements for selling and administrative expenses on the March selling and administrative expense budget should be $41,800.
Variable selling and administrative expense = 3,000 units x $3.50 per unit = $10,500
Fixed selling and administrative expense = $35,800 - $4,500 (depreciation) = $31,300
Total selling and administrative expense budget = $10,500 (variable) + $31,300 (fixed) = $41,800
Therefore, the cash disbursements for selling and administrative expenses on the March selling and administrative expense budget should be $41,800.
Learning Objectives
- Examine the elements of a selling and administrative expense budget and comprehend its influence on cash flow.