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Sheffield Corp. makes and sells umbrellas. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available: Variable Cost Per Unit Sold Monthly Fixed Cost Sales commissions $0.60 $ 7000 Shipping 1.20 Advertising 0.30 Executive salaries 34000 Depreciation on office equipment 8000 Other 0.35 28000 Expenses are paid in the month incurred. If the company has budgeted to sell 7000 umbrellas in October, how much is the total budgeted variable selling and administrative expenses for October?

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Answer:

How much is the total budgeted variable selling and administrative expenses for October?

  • $17,150

Explanation:

                                  Variable Cost          Fixed Cost        Total costs

                                    Per Unit                                           for 7,000 units

Sales commissions        $0.60                     $7,000              $11,200

Shipping                          $1.20                                                $8,400

Advertising                     $0.30                                                $2,100

Executive salaries                                       $34,000           $34,000

Depreciation                                                  $8,000             $8,000

Other                              $0.35                    $28,000           $30,450

TOTAL                            $2.45                    $77,000            $94,150

How much is the total budgeted variable selling and administrative expenses for October?

total variable costs per unit = $2.45 x 7,000 units = $17,150

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