Question

Sales are expected to double in 2019 to $200,000. General and Administrative expenses were $25,000 in...

Sales are expected to double in 2019 to $200,000. General and Administrative expenses were $25,000 in 2018. What will be the General and Administrative expenses forecasted for 2019?

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Answer #1

There are mainly two types of costs are incurred by company one is fixed cost other is variable costs. Fixed costs does not changes with sales level but variable costs are linked to sales and changes with sales level. General and administrative expenses are fixed expenses that are incurred by a company, regardless of sales level. General and administrative expenses are also generally fixed costs in nature. Hence even though sales have double in 2019 General and administrative expenses will be same as 2018 in 2019 which is $25000.

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