Selling and Administrative Expense BudgetTo complete the entire production budget, weneed to add two more items related to production:the selling expenses and the administrativeexpenses. Some of these expenses are variable,like sales commissions, and data entry personnel,while other expenses, like insurance and propertytaxes happen no matter how many pairs of shoeswe make or sell. These are our fixed expenses. Sowe are going to make some assumptions so wecan start work on this budget.Based on prior year's actual expenses, let's assumethat the variable selling expenses of salescommission is calculated at 5% of unit sales. Thefixed selling expenses, typically rent, depreciationexpenses, advertising, and other office expenses.In our example, we will assume the following: rent,$500 per quarter; advertising, $300 per quarter;office expense, $200 per quarter.Total Selling expenses for second and fourthquarter would be:$5,625None of these$6,500$6,125

In the given case, the figure of selling and administrative expenses for budgeting is required, the…

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Total Selling expenses for second and fourth quarter would be: $5,625 None of these $6,500 $6,125

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Selling and Administrative Expense Budget
To complete the entire production budget, we
need to add two more items related to production:
the selling expenses and the administrative
expenses. Some of these expenses are variable,
like sales commissions, and data entry personnel,
while other expenses, like insurance and property
taxes happen no matter how many pairs of shoes
we make or sell. These are our fixed expenses. So
we are going to make some assumptions so we
can start work on this budget.
Based on prior year's actual expenses, let's assume
that the variable selling expenses of sales
commission is calculated at 5% of unit sales. The
fixed selling expenses, typically rent, depreciation
expenses, advertising, and other office expenses.
In our example, we will assume the following: rent,
$500 per quarter; advertising, $300 per quarter;
office expense, $200 per quarter.
Total Selling expenses for second and fourth
quarter would be:
$5,625
None of these
$6,500
$6,125

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