iPad? 10:03 PM ezto.mheducation.com ABC Company\'s budgeted sales for June, July

Question

iPad? 10:03 PM ezto.mheducation.com ABC Company's budgeted sales for June, July, and August are 12,200, 16,200, and 14,200 units respectively. The following cost behavior patterns are budgeted for ABC Company's operating expenses each month: Fixed costs: salaries, $2,100; rent, $5,100; depreciation, $2,500; advertising, $3,300 Mixed costs: utilities, $3,100+$0.60 per unit Variable costs per unit sold: sales commissions, $2.10; marketing promotions, $1.10; supplies, $0.80; bad debt expense, $0.30 Required Prepare ABC Company's operating expense budget for June, July, and August. June July August Variable operating expenses: Sales commissions Marketing promotions Supplies Bad debts expense Utilities Total variable expense Fixed operating expenses: Salaries Rent Depreciation Advertising Utilities Total fixed expense Budgeted operating expense

Explanation / Answer

Solution:

Operating Expenses Budget - ABC Company Particulars June July August Variable operating expenses: Sales Commissions $25,620.00 $34,020.00 $29,820.00 Marketing Promotions $13,420.00 $17,820.00 $15,620.00 Supplies $9,760.00 $12,960.00 $11,360.00 Bad debts expense $3,660.00 $4,860.00 $4,260.00 Utilities $7,320.00 $9,720.00 $8,520.00 Total variable expenses: $59,780.00 $79,380.00 $69,580.00 Fixed operating expenses: Salaries $2,100.00 $2,100.00 $2,100.00 Rent $5,100.00 $5,100.00 $5,100.00 Depreciation $2,500.00 $2,500.00 $2,500.00 Advertising $3,300.00 $3,300.00 $3,300.00 Utlities $3,100.00 $3,100.00 $3,100.00 Total fixed expenses $16,100.00 $16,100.00 $16,100.00 Budgeted operating expenses $75,880.00 $95,480.00 $85,680.00

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