Which of the following expenses would not appear on a selling and administrative

Question

Which of the following expenses would not appear on a selling and administrative expense budget? A) Sales commissions B) Depreciation C) Property taxes D) Indirect labor 2. Boland Manufacturing prepared a 2013 budget for 120.000 units of product. Actual production in 2013 was 130.000 units. To be most useful, what amounts should a performance report for this company compare? A) The actual results for 130.000 units with the original budget for 120.000 units B) The actual results for 130.000 units with a new budget for 130.000 units C) The actual results for 130.000 units with last year's actual results for 134.000 units D) It doesn't matter. All of these choices are equally useful. 3 A company budgeted unit sales of 204.000 units tor January. 2013 and 240.000 units tor February 2013. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales. If there were 61.200 units of inventory on hand on December 31. 2012, how many u its should be produced in January. 2013 in order for the company to meet its goals? A) 214.800 units B) 204.000 units C) 193.200 units D) 276.000 units

Explanation / Answer

1. Indirect Labor would not appear appear on selling and administrative expense budget, because it is a factory overhead cost .

2. The company should compare :The actual ressults for 130,000 units with a new budget for 130,000 units.

3. Inventory on Hand at 31st December 2012 : 61,200 units

The budgeted sales for January 2013 : 204,000 Units

Units available at the begining of January 2014 = 61,200

Required to meet the January 2014 budgeted units (204,000-61,200) = 142,800 units

With this 142,800 units company will have zero inventory at the end of January 2014,but as per company policy the closing inventory should be 30% of next month's budgeted sales ,whch is 240,000 X 30% = 72,000 units

So total number of units to be produced to meet the January budgeted sales and company policy for closing stock requirement = 142,800+72,000= 214,800 units , answer is (A)

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