Warshaw Company budgets payroll at $3,600 per month plus a percentage of monthly sales.The June operating expenses budget includes total payroll of $13,200 with budgeted sales of $160,000.Sales for July are budgeted at $180,000 while purchases of inventory for July are budgeted at $95,000.Depreciation and insurance for July are estimated at $1,000 and $600,respectively.Office and administrative expenses related to purchasing inventory are budgeted at 10% of purchases for the month.The purchase of $2,500 in equipment and $1,500 in furniture is expected in July.
The July payroll should be budgeted at

Question

Quizplus · Accepted Answer

A)
Total Payroll $13,200
- fixed payroll - 3,600
= variable payroll = $9,600 divided by Sales = 6% (payroll as a % of Sales)
Now: $180,000 × 6% = $10,800 Variable Payroll
+ 3,600 Fixed
= $14,400 Total Payroll

Warshaw Company Budgets Payroll at $3,600 Per Month Plus a Percentage