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:
A)$280,000
B)$494,000
C)$224,000
D)$504,000

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:
A)$280,000 
B)$494,000 
C)$224,000 
D)$504,000

Quizplus · Accepted Answer

The budgeted total cash disbursements for selling and administrative expenses for December can be calculated as follows:
Total selling and administrative expenses for December = ($10 + $8 + $7 + $5 + $50,000) x 16,000 = $1,360,000
Depreciation is a non-cash expense, so it should be excluded from the calculation.
Therefore, the budgeted total cash disbursements for selling and administrative expenses for December is:
$10 + $8 + $7 + $5 + $50,000 = $65,000
$65,000 x 16,000 = $1,040,000
So, the correct answer is B) $494,000.

Poriss Corporation Makes and Sells a Single Product Called a Yute