Question

Bear Corp. sells its product for $100. Forecasted sales are 1,500 units in October, 1,600 in November, and 1,600 in December. Variable costs are based on sales, and consist of commissions (5% of sales), advertising (4%) and shipping (4%). Fixed costs per month are $3,900 sales salaries, $3,100 office salaries, $2,200 depreciation, $2,300 office rent, $1,000 insurance and $1,000 utilities.


Required:
Prepare Bear Corp’s selling and administrative expense budget for the period October through December. Present monthly totals as well as a 3-month total.

	October	November	December	Total
Sales in Units
Selling Price
Budgeted Sales
Variable:
Commissions 5%
Advertising 4%
Shipping 4%
Total Variable
Sales Salaries
Office Salaries
Depreciation
Office Rent
Insurance
Utilities
Total Fixed
Total S & A

Answer 1

	Oct	Nov	Dec	Total
Sales in units	1500	1600	1600	4700
Selling Price	100	100	100	100
Budgeted Sales	150000	160000	160000	470000
Variable:
Commissions 5%	7500	8000	8000	23500
Advertising 4%	6000	6400	6400	18800
Shipping 4%	6000	6400	6400	18800
Total Variable	19500	20800	20800	61100
Sales Salaries	3900	3900	3900	11700
Office Salaries	3100	3100	3100	9300
Depreciation	2200	2200	2200	6600
Office Rent	2300	2300	2300	6900
Insurance	1000	1000	1000	3000
Utilities	1000	1000	1000	1000
Total Fixed	13500	13500	13500	40500
Total S & A	33000	34300	34300	101600