Question

During the month of May a company expects to produce 5,000 tables and sell 4,000 tables. Create the operating expense budget for May, using the information shown below. Be sure to include both the total cost and the amount paid for operating expenses.

Credit sales for May: $300,000

Variable costs:

Sales commission expense     $6 per unit

Shipping expense                     $8 per unit

Bad debt expense                    2% of credit sales

Fixed costs:        

Depreciation            $8,000 per month

Salaries                     $12,000 per month

Rent                           $3,000 per month

Advertising               $4,000 per month

Answer 1

Variable costs:
Sales commission expense	24000	=4000*6
Shipping expense	32000	=4000*8
Bad debt expense	6000	=300000*2%
Total Variable costs	62000
Fixed costs:
Depreciation	8000
Salaries	12000
Rent	3000
Advertising	4000
Total Fixed costs	27000
Total operating expenses	89000
Less: Bad debts expense and depreciation expense	14000
Amount paid for operating expenses	75000