Bentonville Inc. bases its marketing and administrative expense budget on budgeted unit sales. The sales budget shows 3,200 units are planned to be sold in December. The variable marketing and administrative expense is $3.10 per unit. The budgeted fixed marketing and administrative expense is $60,800 per month, which includes depreciation of $6,720 per month. The remainder of the fixed marketing and administrative expense represents current cash flows. The cash disbursements for marketing and administrative expenses on the December marketing and administrative expense budget should be:

Question

Quizplus · Accepted Answer

The cash disbursements exclude non-cash expenses like depreciation. Calculate variable expenses (3,200 units * $3.10 = $9,920) and add cash fixed expenses ($60,800 - $6,720 = $54,080). Total cash disbursements = $9,920 + $54,080 = $64,000.