Argyle Company is preparing the operating budget for the first quarter of 2013. They forecast sales of $50 000 in January, $60 000 in February, and $70 000 in March. Variable and fixed expenses are as follows:
Variable: Power cost (40% of Sales)
Miscellaneous expenses (5% of Sales)
Fixed: Salary expense: $8 000 per month Rent expense: $5 000 per month
Depreciation expense: $1 200 per month Power cost/fixed portion: $800 per month
Miscellaneous expenses/fixed portion: $1 000 per month
How much is the total operating expense for February?
A)$41 700
B)$47 500
C)$43 000
D)$38 500

Question

Quizplus · Accepted Answer

The total operating expense for February includes variable expenses (Power cost: 40% of $60,000 = $24,000; Miscellaneous expenses: 5% of $60,000 = $3,000) and fixed expenses (Salary: $8,000; Rent: $5,000; Depreciation: $1,200; Power cost/fixed: $800; Miscellaneous/fixed: $1,000). Adding these gives $24,000 + $3,000 + $8,000 + $5,000 + $1,200 + $800 + $1,000 = $43,000.

Argyle Company Is Preparing the Operating Budget for the First