Menson Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During December, the company budgeted for 5,800 units, but its actual level of activity was 5,830 units. The company has provided the following data concerning the formulas to be used in its budgeting:
-The selling and administrative expenses in the planning budget for December would be closest to:
A) $24,898
B) $24,880
C) $23,988
D) $23,865

Question

Menson Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During December, the company budgeted for 5,800 units, but its actual level of activity was 5,830 units. The company has provided the following data concerning the formulas to be used in its budgeting: 
-The selling and administrative expenses in the planning budget for December would be closest to:
A) $24,898 
B) $24,880 
C) $23,988 
D) $23,865

Quizplus · Accepted Answer

First, we need to calculate the variable selling and administrative expenses per unit:
Variable selling and administrative expenses = $150,000 / 8,000 units = $18.75 per unit

Next, we need to calculate the fixed selling and administrative expenses:
Fixed selling and administrative expenses = $84,000

Using this information, we can now calculate the total selling and administrative expenses in the planning budget for December:
Total selling and administrative expenses = (Fixed selling and administrative expenses) + (Variable selling and administrative expenses per unit x Actual units sold)
Total selling and administrative expenses = ($84,000) + ($18.75 x 5,830 units)
Total selling and administrative expenses = $24,880

Therefore, the closest answer option is B) $24,880.

Menson Corporation Manufactures and Sells a Single Product