ABC Company's budgeted sales for June, July, and August are 16,000, 20,000, and 18,000 units respectively. The following cost behavior patterns are budgeted for ABC Company's operating expenses each month: Fixed costs: salaries, $4,000; rent, $7,000; depreciation, $4,400; advertising, $5,200 Mixed costs: utilities, $5,000+ $0.50 per unit Variable costs per unit sold: sales commissions, $4.00; marketing promotions, $3.00; supplies, $0.85; bad debt expense, $0.55 Required: Prepare ABC Company's operating expense budget for June, July, and August. July August Variable operating expenses: Sales commissions Marketing promotions Supplies Bad debts expense Utilities Total variable expense Fixed operating expenses: Salaries Rent Depreciation Advertising Utilities Total fixed expense Budgeted operating expense June
ABC Company's budgeted sales for June, July, and August are 16,000, 20,000, and 18,000 units respectively. The following cost behavior patterns are budgeted for ABC Company's operating expenses each month: Fixed costs: salaries, $4,000; rent, $7,000; depreciation, $4,400; advertising, $5,200 Mixed costs: utilities, $5,000+ $0.50 per unit Variable costs per unit sold: sales commissions, $4.00; marketing promotions, $3.00; supplies, $0.85; bad debt expense, $0.55 Required: Prepare ABC Company's operating expense budget for June, July, and August. July August Variable operating expenses: Sales commissions Marketing promotions Supplies Bad debts expense Utilities Total variable expense Fixed operating expenses: Salaries Rent Depreciation Advertising Utilities Total fixed expense Budgeted operating expense June
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:ABC Company's budgeted sales for June, July, and August are 16,000, 20,000, and 18,000 units respectively. The following cost
behavior patterns are budgeted for ABC Company's operating expenses each month:
Fixed costs: salaries, $4,000; rent, $7,000; depreciation, $4,400; advertising, $5,200
Mixed costs: utilities, $5,000 + $0.50 per unit
Variable costs per unit sold: sales commissions, $4.00; marketing promotions, $3.00; supplies, $0.85; bad debt expense, $0.55
Required:
Prepare ABC Company's operating expense budget for June, July, and August.
Variable operating expenses:
Sales commissions
Marketing promotions
Supplies
Bad debts expense
Utilities
Total variable expense
Fixed operating expenses:
Salaries
Rent
Depreciation
Advertising
Utilities
Total fixed expense
Budgeted operating expense
June
July August
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Step 1: Introduce to variable cost and fixed cost
VIEWStep 2: Working for sales commission expense
VIEWStep 3: Working for marketing promotion expense
VIEWStep 4: Working for supplies expense
VIEWStep 5: Working for bad debt expense
VIEWStep 6: Working for variable utilities expense
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