Lahay Inc. bases its selling and administrative expense budget on the number of

Question

Lahay Inc. bases its selling and administrative expense budget on the number of units sold. The variable selling and administrative expense is $4.80 per unit. The budgeted fixed selling and administrative expense is $30,290 per month, which includes depreciation of $3,560. The remainder of the fixed selling and administrative expense represents current cash flows. The sales budget shows 2,400 units are planned to be sold in November.

Explanation / Answer

1.Selling and administrative expenses budget for november:

Variable cost. 2400*4.8= 11520

Fixed cost excluding dep. 26730

Depreciation. 3560

Total. 31810

2. Cash disbursement for selling and admin expense are:

Variable cost. 11520

Fixed cost. 26740

Total 28250

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