Warshaw Company budgets payroll at $3,600 per month plus a percentage of monthly sales. The June operating expense budget includes total payroll of $13,200 with budgeted sales of $160,000. Sales for July are budgeted at $180,000 while purchases of inventory for July are budgeted at $95,000. Depreciation and insurance for July are estimated at $1,000 and $600, respectively. Office and administrative expenses related to purchasing inventory are budgeted at 10% of purchases for the month. The purchase of $2,500 in equipment and $1,500 in furniture is expected in July. The July payroll should be budgeted at

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The payroll includes a fixed amount of $3,600 plus a percentage of sales. In June, the payroll was $13,200 with sales of $160,000. The variable portion is $13,200 - $3,600 = $9,600, which is 6% of sales ($9,600 / $160,000). For July, with sales of $180,000, the payroll is $3,600 + (6% of $180,000) = $3,600 + $10,800 = $14,400.

Warshaw Company Budgets Payroll at $3,600 Per Month Plus a Percentage