Question

The Prattle Corporation makes and sells only one product called a Deb. The company is in the process of preparing its Selling and Administrative Expense Budget for next year. The following budget data are available:

	Monthly Fixed Cost	Variable Cost Per Deb Sold
Sales commissions		$0.80
Shipping		$1.20
Advertising	$40,000	$0.30
Executive salaries	$35,000
Depreciation on office equipment	$10,000
Other	$25,000

All of these expenses (except depreciation) are paid in cash in the month they are incurred.

If the company has budgeted to sell 20,000 Debs in March, then the average budgeted selling and administrative expenses per unit sold for March is closest to:

a. $7.80 per unit

b. $9.00 per unit

c. $8.50 per unit

d. $6.80 per unit

Answer 1

Sellng & administrative Expenses budget
	per unit
Sales Commssion	$       0.80
Shippng	$       1.20
Advertising ($40000/20000)+0.30	$       2.30
Executive salaries ($35000/20000)	$       1.75
Other ($25000/20000)	$       1.25
Depreiation ($10000/20000)	$       0.50
Total	$       7.80
Correct Option : a. $7.80 per unit