Calculate total budgeted selling and administrative expenses for the month of January.

Question

Pearl, Inc. has prepared the operating budget for the first quarter of the year. The company forecast
sales of $45,000 in January, $55,000 in February, and $65,000 in March. Variable and fixed selling and
administrative expenses are as follows:
Variable Expenses:
Power cost (20% of sales)
Miscellaneous expenses: (10% of sales)
Fixed Expenses:
Salaries expense: $6000 per month
Rent expense: $5000 per month
Depreciation expense: $1400 per month
Power cost/fixed portion: $600 per month
Miscellaneous expenses/fixed portion: $1200 per month
A) $27,700
B) $33,700
C) $13,500
D) $30,700

Answer 1

A) $27,700

Calculation of total selling and administrative expenses for the month of January: