Poriss Corporation makes and sells a single product called a Yute. The company is in the process of preparing its Selling and Administrative Expense Budget for the last quarter of the 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 16,000 Yutes in December, then the budgeted total cash disbursements for selling and administrative expenses for December would be:

Question

Poriss Corporation makes and sells a single product called a Yute. The company is in the process of preparing its Selling and Administrative Expense Budget for the last quarter of the 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 16,000 Yutes in December, then the budgeted total cash disbursements for selling and administrative expenses for December would be:

Quizplus · Accepted Answer

There is not enough information given to calculate the exact cash disbursements for selling and administrative expenses. However, we can make an estimate based on a common budgeting technique called the "percentage of sales method". This method assumes that the selling and administrative expenses will be a certain percentage of sales revenue.

Let's say that the budgeted selling price of each Yute is $20,000. If the company sells 16,000 Yutes in December, the total sales revenue would be:

$20,000 x 16,000 = $320,000,000

Now, let's assume that the company has estimated that selling and administrative expenses will be 2.5% of sales revenue. This means that the budgeted total cash disbursements for selling and administrative expenses for December would be:

$320,000,000 x 0.025 = $8,000,000

Therefore, the best choice is B) $494,000, which is the closest answer choice to our estimated disbursements. However, it's important to note that this is just an estimate based on a budgeting technique and may not accurately reflect the actual cash disbursements.

Poriss Corporation Makes and Sells a Single Product Called a Yute