Question

Pharoah Company makes and sells widgets. The company is in the process of preparing its Selling and Administrative Expense Budget for the month. The following budget data are available:

Item	Variable Cost Per Unit Sold	Monthly Fixed Cost
Sales commissions	$3	$5000
Shipping	$3
Advertising	$3
Executive salaries		$60700
Depreciation on office equipment		$2200
Other	$2	$3400

Expenses are paid in the month incurred. If the company has budgeted to sell 40700 widgets in October, how much is the total budgeted selling and administrative expenses for October?

$519000

$71300

$513400

$447700

Answer 1

Budgeted variable cost per unit sold

= Sales commissions + Shipping + Advertising + Other

= $3 + $3 + $3 + $2

= $11 per unit

So, Budgeted Variable costs

= Variable cost per unit x Budgeted Sales units

= $11 x 40,700

= $ 447,700

Budgeted Fixed Costs

= Sales commissions + Executive salaries + Depreciation on office equipment + Other

= $5,000 + $60,700 + $2,200 + $3,400

= $ 71,300

So, Total Budgeted selling and administrative expenses

= Variable Expenses + Fixed Expenses

= $ 447,700 + $ 71,300

= $519,000

So, as per above calculations, option A is the correct option