Pearl,Inc.has prepared the operating budget for the first quarter of the year.The company forecast sales of $40,000 in January,$50,000 in February,and $60,000 in March.Variable and fixed selling and administrative expenses are as follows:
Variable Expenses:
Power cost (30% of sales)
Miscellaneous expenses: (5% of sales)
Fixed Expenses:
Salaries expense: $8000 per month
Rent expense: $5000 per month
Depreciation expense: $1400 per month
Power cost/fixed portion: $800 per month
Miscellaneous expenses/fixed portion: $1200 per month
Calculate total budgeted selling and administrative expenses for the month of January.

Question

Pearl,Inc.has prepared the operating budget for the first quarter of the year.The company forecast sales of $40,000 in January,$50,000 in February,and $60,000 in March.Variable and fixed selling and administrative expenses are as follows: 
Variable Expenses:
Power cost (30% of sales)
Miscellaneous expenses: (5% of sales)
Fixed Expenses:
Salaries expense: $8000 per month
Rent expense: $5000 per month
Depreciation expense: $1400 per month
Power cost/fixed portion: $800 per month
Miscellaneous expenses/fixed portion: $1200 per month
Calculate total budgeted selling and administrative expenses for the month of January.

Quizplus · Accepted Answer

Total budgeted selling and administrative expenses for the month of January = Variable expenses + Fixed expensesVariable expenses = Power cost (30% of sales) + Miscellaneous expenses (5% of sales)= (30% * $40,000) + (5% * $40,000)= $12,000 + $2,000= $14,000Fixed expenses = Salaries expense + Rent expense + Depreciation expense + Power cost (fixed portion) + Miscellaneous expenses (fixed portion)= $8,000 + $5,000 + $1,400 + $800 + $1,200= $16,400Total budgeted selling and administrative expenses = $14,000 + $16,400= $30,400

Pearl,Inchas Prepared the Operating Budget for the First Quarter of the Year.The