Duncan Company combines its operating expenses for budget purposes in a selling

Question

Duncan Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first 6 months of 2014, the following data are available. 1. Sales: 20,600 units quarter 1; 22,400 units quarter 2. 2. Variable costs per dollar of sales: sales commissions 5%, delivery expense 2%, and advertising 4%. 3. Fixed costs per quarter: sales salaries $10,200, office salaries $6,290, depreciation $4,740, insurance $2,010, utilities $840, and repairs expense $700. 4. Unit selling price: $24. Prepare a selling and administrative expense budget by quarters for the first 6 months of 2014.

Explanation / Answer

Particulars Quarter 1 Quarter 2 Total No Of units Sold 20600 22400 43000 Unit SP 24 24 24 Variable Cost Sale Commission (20600,22400*24*5%) 24720 26880 51600 Delivery Exps (20600,22400*24*2%) 9888 10752 20640 Adv Exps (20600,22400*24*4%) 19776 21504 41280 Total 54384 59136 113520 Fixed Cost Staff Salaries 10200 10200 20400 Office Salaries 6290 6290 12580 Deprecation 4740 4740 9480 Insurance 2010 2010 4020 Utilities 840 840 1680 Repair Exps 700 700 1400 Total 24780 24780 49560 Total Sales and Administration Budget(Var+FC) 79164 83916 163080

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