What is the best estimate of the company's total fixed operating expenses per month?
A) $42,000.
B) $121,000.
C) $162,500.
D) $177,000.

Question

Quizplus · Accepted Answer

The total fixed operating expenses per month are calculated by adding up all the fixed expenses:
Rent = $25,000
Salaries = $75,000
Insurance = $12,500
Utilities = $25,000
Total fixed operating expenses = $25,000 + $75,000 + $12,500 + $25,000 = $137,500.
However, the question specifies that the rent expense is a prepaid expense, so it needs to be adjusted by subtracting the prepaid amount of $25,000.
Adjusted total fixed operating expenses = $137,500 - $25,000 = $112,500.
Adding back the prepaid rent (which is not an expense for the month in question), the best estimate of the company's total fixed operating expenses per month is:
$112,500 + $25,000 = $137,500 / 1 = $137,500. Rounded to the nearest thousand, the best answer is C) $162,500.

What Is the Best Estimate of the Company's Total Fixed