Comma Co.makes and sells widgets.The company is in the process of preparing its selling and administrative expense budget for the month.The following budget data are available: $\begin{array}{lll}\text { Item }&\text { Variable Cost Per Unit Sold }&\text { Monthly Fixed Cost }\
\text { Sales commissions } & \$ 1 & \$ 10,000 \
\text { Shipping } & \$ 3 & \
\text { Advertising } & \$ 4 &\
\text { Executive salaries } & & \$ 120,000 \
\text { Depreciation on office equipment } & & \$ 4,000 \
\text { Other } & \$ 2 & \$ 6,000
\end{array}$ Expenses are paid in the month incurred.If the company has budgeted to sell 80,000 widgets in October, how much is the total budgeted selling and administrative expenses for October?
A)$940,000
B)$140,000
C)$930,000
D)$800,000

Question

Quizplus · Accepted Answer

Total budgeted selling and administrative expenses = Variable costs + Fixed costsVariable costs = Sales commissions + Shipping + Advertising + Other= (1 * 80,000) + (3 * 80,000) + (4 * 80,000) + (2 * 80,000)= $80,000 + $240,000 + $320,000 + $160,000= $800,000Fixed costs = Executive salaries + Depreciation on office equipment= $120,000 + $4,000= $124,000Total budgeted selling and administrative expenses = $800,000 + $124,000= $924,000

Comma CoMakes and Sells Widgets Expenses Are Paid in the Month Incurred