Bee Company is a honey wholesaler.An income statement and other data for the second quarter of the year are given below: Bee Company's cost formula for total selling and administrative expenses, with "X" equal to the number of units sold would be:
A)Y = $123, 200 + $4.80X
B)Y = $123, 200 + $6.80X
C)Y = $275, 000 + $4.80X
D)Y = $166, 200 + $6.80X

Question

Bee Company is a honey wholesaler.An income statement and other data for the second quarter of the year are given below:   Bee Company's cost formula for total selling and administrative expenses, with "X" equal to the number of units sold would be:
A)Y = $123, 200 + $4.80X 
B)Y = $123, 200 + $6.80X 
C)Y = $275, 000 + $4.80X 
D)Y = $166, 200 + $6.80X

Quizplus · Accepted Answer

Unit sales = $960, 000 ÷ $60 per unit = 16, 000 units
Selling expenses = Fixed selling expenses + (0.08 × Sales)
$200, 000 = Fixed selling expenses + (0.08 × $960, 000)
Fixed selling expenses = $200, 000 - $76, 800 = $123, 200
Variable selling expense per unit = 0.08 × $60 per unit = $4.80 per unit
Administrative expenses = Fixed administrative expenses + ($2 per unit × 16, 000 units)
$75, 000 = Fixed administrative expenses + ($2 per unit × 16, 000 units)
Fixed administrative expenses = $75, 000 - $32, 000 = $43, 000
Total selling and administrative expenses = ($123, 200 + $43, 000)+ ($4.80 + $2.00)X
= $166, 200 + $6.80X

Bee Company Is a Honey Wholesaler