Question

Kirkland Company combines its operating expenses for budget purposes in a selling and administrative expense budget....

Kirkland Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first 6 months of 2017, the following data are available.

1. Sales: 21,000 units quarter 1; 22,200 units quarter 2.
2. Variable costs per dollar of sales: sales commissions 5%, delivery expense 2%, and advertising 3%.
3. Fixed costs per quarter: sales salaries $10,400, office salaries $6,100, depreciation $4,770, insurance $1,920, utilities $830, and repairs expense $620.
4.

Unit selling price: $22.


Prepare a selling and administrative expense budget by quarters for the first 6 months of 2017.

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Answer:-

Kirkland Company
Calculation of Selling & Administrative expenses
Particluars 1st Qtr 2nd Qtr
$ $
Sales unit (a) 21000 22200
Selling price per unit (b) $22 $22
Sales Value 462000 488400
Variable costs:-
Sales Commissions 462000*5%=23100 488400*5%=24420
Delivery Expenses 462000*2%=9240 488400*2%=9768
Advertising 462000*3%=13860 488400*3%=14652
Fixed Costs:-
Sales Salaries 10400 10400
Depreciation 4770 4770
Office Salaries 6100 6100
Insurance 1920 1920
Utilities 830 830
Repairs 620 620
Total selling & adminitrative expenses 70840 73480
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