Question

​Zelia, Inc. has prepared the operating budget for the first quarter of the year. The company forecast sales of

$ 40 comma 000$40,000

in​ January,

$ 50 comma 000$50,000

in​ February, and

$ 60 comma 000$60,000

in March. Variable and fixed expenses are as​ follows:

Variable​ Expenses:

Power cost

​(4040​%

of​ sales)Miscellaneous​ expenses:

​(55​%

of​ sales)

Fixed​ Expenses:

Salaries​ expense:

$ 8 comma 000$8,000

per monthRent​ expense:

$ 4 comma 000$4,000

per monthDepreciation​ expense:

$ 1 comma 000$1,000

per monthPower​ cost/fixed portion:

$ 500$500

per monthMiscellaneous​ expenses/fixed portion:

$ 1 comma 000$1,000

per month

Using the information​ above, calculate the amount of budgeted selling and administrative expenses for the month of February.

A.

$ 32 comma 500$32,500

B.

$ 37 comma 000$37,000

C.

$ 22 comma 500$22,500

D.

$ 41 comma 500$41,500

Answer 1

Calculate budgeted selling and administrative expense

	February
Sales	50000
Variable expense
Power cost (50000*40%)	20000
Miscellaneous cost (50000*55%)	27500
Total Variable cost	47500
Fixed expense
Salaries expense	8000
Rent expense	4000
Depreciation expense	1000
Power cost	500
Miscellaneous cost	1000
Total Fixed cost	14500
Total Expense	62000