Farmer Corporation budgeted sales of its product during the next fiscal year at 225,000 units,with a selling price of $17.50 per unit.Sales commissions are 6% of sales and other variable selling and administrative costs are 15% of sales.Fixed selling and administrative costs are estimated at $430,000.The budgeted selling and administrative costs for the next fiscal year are:

Question

Quizplus · Accepted Answer

The budgeted selling and administrative costs include both variable and fixed costs. Variable costs are 21% of sales (6% commission + 15% other costs), which is 21% of (225,000 units * $17.50) = $826,875. Adding fixed costs of $430,000 gives a total of $1,256,875.

Farmer Corporation Budgeted Sales of Its Product During the Next