The following budget information is available for Crescent Company for January Year 2: Sales
$ 800,000
Cost of goods sold
540,000
Utilities expense
2,500
Administrative salaries
100,000
Sales commissions
5% of sales
Advertising
20,000
Depreciation on store equipment
50,000
Rent on administration building
60,000
Miscellaneous administrative expenses
10,000
Percentage of sales on credit
80%
All operating expenses are paid in cash in the month incurred.The amount of expected cash outflow for selling and administrative expenses would be:
A) $262,500.
B) $247,50.
C) $232,500.
D) $312,500.

Question

Quizplus · Accepted Answer

Budgeted cash payments for selling and administrative expenses = Utilities expense + Administrative salaries + Sales commissions + Advertising + Rent on administrative building + Miscellaneous expenses
Budgeted cash payments for selling and administrative expenses = $2,500 + $100,000 + ($800,000 x 5%)+ $20,000 + $60,000 + $10,000 = $232,500

The Following Budget Information Is Available for Crescent Company for January