Question

Ch. 14 part 3

Danzi, Inc., has budgeted sales for the month of July and estimated cost behavior patterns for a number of its expenses listed below. From this information prepare an operating expense budget for the month of July.

Budgeted sales revenue	$230,000
Budgeted sales	4,600 units
Budgeted production	4,900 units
(Partial listing of expense items):
Sales commission	5% of sales
Sales salaries	$6,800
Production supervisor salaries	7,600
Administrative salaries	9,400
Administrative expense	8,000
Marketing promotions	$0.75 per unit
Depreciation on plant equipment	$5,000
Depreciation on office equipment	2,500
Raw materials used	$7.50 per unit
Advertising	$4,200
Delivery expense	$0.50 per unit
Bad debt expense	1% of sales
Property taxes on plant	$5,000
Property taxes on office	3,000

Answer 1

Danzi, Inc

Operating expense budget

For Month Ended July 31

Selling Expenses :
Variable Selling Expenses:
Sales Commission (5% * $230,000)	11,500
Marketing Promotions ($0.75 * 4,600 units)	3,450
Delivery Expense ($0.50 * 4,600 units)	2,300
Bad Debts Expense (1% * $230,000)	2,300
Total Variable Selling Expenses	19,550
Fixed Selling Expenses
Sales Salaries	6,800
Advertising	4,200
Total Fixed Selling Expenses	11,000
Total Selling Expenses	30,550
Administrative Expenses
Administrative Salaries	9,400
Administrative Expense	8,000
Depreciation on Office Equipment	2,500
Property Taxes on Office	3,000
Total Administrative Expenses	22,900
Budgeted Operating Expenses	$53,450