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 16,000 Debs in February,then the total budgeted fixed selling and administrative expenses for February is:
A)$75,000
B)$70,000
C)$110,000
D)$100,000

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 16,000 Debs in February,then the total budgeted fixed selling and administrative expenses for February is:
A)$75,000 
B)$70,000 
C)$110,000 
D)$100,000

Quizplus · Accepted Answer

Total fixed selling and administrative expenses per month = $40,000 (salaries) + $20,000 (rent) + $20,000 (other fixed expenses) + $30,000 (depreciation) = $110,000.
Since all the expenses are fixed, they do not change with changes in output. Therefore, the total fixed selling and administrative expenses for February will also be $110,000, regardless of the number of Debs sold.

The Prattle Corporation Makes and Sells Only One Product Called