Search
Ask a question
0 0

Accounting Budgeted Expenses Question Will Give Best Answer, Need Help Today

I need detailed help on how to solve, and where each number comes from to obtain correct answer of E)
 
Orange Corporation makes and sells a single product called the IPax. The demand for IPax is growing rapidly and the company plans to increase its stock of IPax from 8,000 units at the end of the current year to 16,000 by the end of the first quarter next year. To meet the market demand and the company inventory goal, Orange has to produce a total of 70,000 units in the first quarter of the next year. The company is also considering revising the operating budget for its Marketing and Selling Department beginning with the first quarter of the next year. An itemized cost estimates for the department are as follows :
 
Sales Commissions : Variable Cost Per Unit : $6.80
Shipping : Variable Cost Per Unit : $8.30
Advertising : Variable Cost Per Unit : $2.10 , Fixed Component Per Month : $14,000
Department Manager's Salaries : Fixed Component Per Month : $142,000
Depreciation on Office Equipment : $1,000
Other Selling Expenses : Variable Cost Per Unit : $0.70 , Fixed Component Per Month : $32,000
 
Question : Determine the budgeted marketing and selling expenses for the first quarter of the next year :
A) 1,477,800 B) 1,119,800 C) 1,298,800 D) 1,580,800 E) None
 
Thanks in advance :)
 
Tutors, please sign in to answer this question.

1 Answer

1) Multiply 1st quarter units by the total variable costs per unit.  This is your total variable cost for the 1st quarter.
 
2) Add all the fixed components per month together.  Multiply this by 3.  This is your fixed cost for the 1st quarter.
 
3) Add 2 and 3 together.