Schuepfer Incorporated bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 3,500 units are planned to be sold in March. The variable selling and administrative expense is $4.00 per unit. The budgeted fixed selling and administrative expense is $35,850 per month, which includes depreciation of $5,000 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the March selling and administrative expense budget should be: Multiple Choice O $49,850 O $44,850 O $30,850 O $14,000

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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**Selling and Administrative Expense Budget: March Analysis**

Schuepfer Incorporated bases its selling and administrative expense budget on budgeted unit sales. According to the sales budget, 3,500 units are planned to be sold in March. The variable selling and administrative expense is $4.00 per unit. The budgeted fixed selling and administrative expense is $35,850 per month, which includes depreciation of $5,000 per month. The remainder of the fixed selling and administrative expense represents current cash flows.

**Multiple Choice Question:**

Given this information, determine the cash disbursements for selling and administrative expenses on the March selling and administrative expense budget. Choose the correct amount from the following options:

- $49,850
- $44,850
- $30,850
- $14,000

**Analysis:**

1. **Calculate Variable Expenses:**
   - Units Sold: 3,500
   - Variable Expense per Unit: $4.00
   - Total Variable Expenses = 3,500 units x $4.00/unit = $14,000

2. **Fixed Expenses Calculation:**
   - Total Fixed Expenses: $35,850
   - Depreciation (Non-cash): $5,000
   - Cash Flow Component of Fixed Expenses = $35,850 - $5,000 = $30,850

3. **Total Cash Disbursements:**
   - Cash Disbursements = Total Variable Expenses + Cash Flow Component of Fixed Expenses
   - Cash Disbursements = $14,000 + $30,850 = $44,850

Therefore, the correct answer is **$44,850**.
Transcribed Image Text:**Selling and Administrative Expense Budget: March Analysis** Schuepfer Incorporated bases its selling and administrative expense budget on budgeted unit sales. According to the sales budget, 3,500 units are planned to be sold in March. The variable selling and administrative expense is $4.00 per unit. The budgeted fixed selling and administrative expense is $35,850 per month, which includes depreciation of $5,000 per month. The remainder of the fixed selling and administrative expense represents current cash flows. **Multiple Choice Question:** Given this information, determine the cash disbursements for selling and administrative expenses on the March selling and administrative expense budget. Choose the correct amount from the following options: - $49,850 - $44,850 - $30,850 - $14,000 **Analysis:** 1. **Calculate Variable Expenses:** - Units Sold: 3,500 - Variable Expense per Unit: $4.00 - Total Variable Expenses = 3,500 units x $4.00/unit = $14,000 2. **Fixed Expenses Calculation:** - Total Fixed Expenses: $35,850 - Depreciation (Non-cash): $5,000 - Cash Flow Component of Fixed Expenses = $35,850 - $5,000 = $30,850 3. **Total Cash Disbursements:** - Cash Disbursements = Total Variable Expenses + Cash Flow Component of Fixed Expenses - Cash Disbursements = $14,000 + $30,850 = $44,850 Therefore, the correct answer is **$44,850**.
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Step 1 Introduction

The expenditures associated with running a firm are referred to as operating expenses, often known as selling, general, and administrative expenses (SG&A). They include marketing and advertising, sales and accountancy, as well as management and administrative pay, as well as rent and utilities.

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