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Question(s) / Instruction(s):

A company is in the process of preparing its Selling and Administrative Expense Budget for next year. The following budget data are available:

                                                                                Monthly

                                                                Fixed Cost                           Variable

Cost Per

Unit Sold

Sales commissions                                                                          $0.75

Shipping                                                                                              $1.30

Advertising                                                         $30,000 $0.20

Executive salaries                                            $25,000

Depreciation on office equipment           $15,000

Other                                                                    $7,000  

All of these expenses (except depreciation) are paid in cash in the month they are incurred.

If the company has budgeted to sell 20,000 units in March, then the total budgeted selling and administrative expenses per unit sold for March is:

 a)           $2.25

 b)           $5.35

 c)           $5.80

 d)           $6.10

 

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