The Prattle Corporation makes and sells only one product called a Deb.The company is in the process of preparing its Selling and Administrative Expense Budget for next year.The following budget data are available: All of these expenses (except depreciation)are paid in cash in the month they are incurred. If the company has budgeted to sell 17, 000 Debs in January, then the total budgeted variable selling and administrative expenses for January will be:

Question

The Prattle Corporation makes and sells only one product called a Deb.The company is in the process of preparing its Selling and Administrative Expense Budget for next year.The following budget data are available:  All of these expenses (except depreciation)are paid in cash in the month they are incurred. If the company has budgeted to sell 17, 000 Debs in January, then the total budgeted variable selling and administrative expenses for January will be:

Quizplus · Accepted Answer

Total budgeted variable selling and administrative expenses for January can be calculated as follows:

Variable selling and administrative expenses per unit = $1.80 + $0.60 + $0.50 = $2.90
Total budgeted variable selling and administrative expenses for January = Variable selling and administrative expenses per unit x Budgeted sales in January
= $2.90 x 17,000
= $49,300

However, out of this, $10,200 is depreciation expense which is not a cash outflow. Therefore, the total budgeted variable selling and administrative expenses for January will be:
= $49,300 - $10,200
= $39,100

Hence, the best choice is B.

The Prattle Corporation Makes and Sells Only One Product Called