The following budget information is available for the Arch Company for January Year 2: $$\begin{array} { l c }
\text { Sales } & \$ 860,000 \
\text { Cost of goods sold } & 540,000 \
\text { Utilities expense } & 2,800 \
\text { Administrative salaries } & 100,000 \
\text { Sales commissions } & 5 \% \text { of sales } \
\text { Advertising } & 20,000 \
\text { Depreciation on store equipment } & 50,000 \
\text { Rent on administration building } & 60,000 \
\text { Miscellaneous administrative expenses } & 10,000
\end{array}$$ All operating expenses are paid in cash in the month incurred.Compute the total budgeted selling and administrative expenses (excluding interest)amount for January Year 2.
A) $262,500
B) $283,000
C) $240,000
D) $285,800

Question

The following budget information is available for the Arch Company for January Year 2: $$\begin{array} { l c } 
\text { Sales } & \$ 860,000 \
\text { Cost of goods sold } & 540,000 \
\text { Utilities expense } & 2,800 \
\text { Administrative salaries } & 100,000 \
\text { Sales commissions } & 5 \% \text { of sales } \
\text { Advertising } & 20,000 \
\text { Depreciation on store equipment } & 50,000 \
\text { Rent on administration building } & 60,000 \
\text { Miscellaneous administrative expenses } & 10,000
\end{array}$$ All operating expenses are paid in cash in the month incurred.Compute the total budgeted selling and administrative expenses (excluding interest)amount for January Year 2.
A) $262,500
B) $283,000
C) $240,000
D) $285,800

Quizplus · Accepted Answer

The total budgeted selling and administrative expenses are calculated as follows: Sales commissions (5% of $860,000) = $43,000, Administrative salaries = $100,000, Advertising = $20,000, Depreciation on store equipment = $50,000, Rent on administration building = $60,000, Miscellaneous administrative expenses = $10,000. Adding these gives $283,000. Including Utilities expense of $2,800, the total is $285,800.

The Following Budget Information Is Available for the Arch Company