Luc Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During February, the company budgeted for 5,000 units, but its actual level of activity was 4,950 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for February:
-The selling and administrative expenses in the planning budget for February would be closest to:
A) $30,490
B) $30,495
C) $30,500
D) $30,190

Question

Luc Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During February, the company budgeted for 5,000 units, but its actual level of activity was 4,950 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for February: 
-The selling and administrative expenses in the planning budget for February would be closest to:
A) $30,490 
B) $30,495 
C) $30,500 
D) $30,190

Quizplus · Accepted Answer

To calculate the budgeted selling and administrative expenses, we need to use the following formula:

Budgeted Selling and Administrative Expenses = Budgeted Selling and Administrative Cost per Unit x Actual Units Sold

Using the data provided, the budgeted selling and administrative cost per unit is $6.10 ($30,500/5,000 units). To find the actual selling and administrative expenses, we multiply this cost per unit by the actual units sold (4,950 units).

Budgeted Selling and Administrative Expenses = $6.10 x 4,950 units
Budgeted Selling and Administrative Expenses = $30,195

Therefore, the closest answer choice is C) $30,500.

Luc Corporation Manufactures and Sells a Single Product