Kapital Ltd has prepared the operating budget for the first quarter of 2017.The company forecasts sales of $50,000 in January,$60,000 in February and $70,000 in March.Variable and fixed expenses are as follows:
Variable: electricity cost (40% of sales)
Miscellaneous expenses: (10% of sales)
Fixed: salary expense: $8000 per month
Rent expense: $4000 per month
Depreciation expense: $1200 per month
Electricity cost/fixed portion: $800 per month
Miscellaneous expenses/fixed portion: $1200 per month
Calculate total operating expenses for the month of January.
A) $40,200
B) $25,000
C) $50,200
D) $45,200

Question

Quizplus · Accepted Answer

Variable expenses for January:Electricity cost (40% of sales) = $50,000 x 40% = $20,000Miscellaneous expenses (10% of sales) = $50,000 x 10% = $5,000Fixed expenses for January:Salary expense = $8,000Rent expense = $4,000Depreciation expense = $1,200Electricity cost/fixed portion = $800Miscellaneous expenses/fixed portion = $1,200Total operating expenses for January = Variable expenses + Fixed expenses= $20,000 + $5,000 + $8,000 + $4,000 + $1,200 + $800 + $1,200= $40,200

Kapital Ltd Has Prepared the Operating Budget for the First