Selling and administrative expenses are billed and paid the month after they occur. Selling and administrative expenses have both a fixed and a variable component. The fixed component is a constant $4,700 a month. The variable component equals 5 percent of revenues. Given revenues of $300,000 for January, $350,000 for February, and $400,000 for March, what would be the budgeted selling and administrative expenses that would be paid in March?

Question

Quizplus · Accepted Answer

To find the budgeted selling and administrative expenses that would be paid in March, we need to first calculate the variable component for each month:

- January: 5% x $300,000 = $15,000
- February: 5% x $350,000 = $17,500
- March: 5% x $400,000 = $20,000

Then, we can calculate the total selling and administrative expenses for each month:

- January: $4,700 + $15,000 = $19,700
- February: $4,700 + $17,500 = $22,200
- March: $4,700 + $20,000 = $24,700

However, we're only interested in the expenses that will be paid in March, which are the expenses that occurred in February (since selling and administrative expenses are billed and paid the month after they occur) and any fixed expenses. Therefore, the budgeted selling and administrative expenses that will be paid in March are:

$4,700 (fixed) + $17,500 (variable for February) = $22,200

So, the correct answer is C.

Selling and Administrative Expenses Are Billed and Paid the Month