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 $3.90 per unit. The budgeted fixed selling and administrative expense is $30,340 per month, which includes depreciation of $3,610. The remainder of the fixed selling and administrative expense represents current cash flows. The sales budget shows 2,900 units are planned to be sold in November. Required: Prepare the selling and administrative expense budget for November.

Explanation / Answer

Selling and Administrative Expense Budget of LAHAY INC for the month of November.

Particulars                                              Per unit                 amount

Selling administration expenses

                  -Variable                                                                    3.90                                    11310

                -Fixed           (30340-3610) 26730

                  Total 38040

Note: The selling and administrative expense budget is comprised of the budgets of all non-manufacturing departments, such as the sales, marketing, accounting, engineering, and facilities departments. Thus, Depreciation expense to the extent of $ 3610 has been deducted from Fixed selling and administration expense .

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