Use the information below to answer the following question(s).
Bigelow Company budgets payroll at $4,000 per month plus a percentage of monthly sales. The June operating expense budget includes total payroll of $12,000 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 at Bigelow Company should be budgeted at

Question

Quizplus · Accepted Answer

- First, we need to calculate the percentage of monthly sales that is added to the base payroll of $4,000:
$12,000 (total payroll) - $4,000 (base payroll) = $8,000 (percentage of monthly sales)
$8,000 ÷ $160,000 (budgeted sales) = 0.05 or 5%
- Next, we can use this percentage to calculate the July payroll:
$4,000 (base payroll) + (0.05 x $180,000) (percentage of monthly sales based on July budgeted sales) = $13,000
Therefore, the answer is B, $13,000.

Use the Information Below to Answer the Following Question(s)