23) Schuepfer Inc. bases its selling and administrative expense budget on budget

Question

23) Schuepfer Inc. bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 1,300 units are planned to be sold in March. The variable selling and administrative expense is $4.20 per unit. The budgeted fixed selling and administrative expense is $19,240 per month, which includes depreciation of $3,380 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the March selling and administrative expense budget should be: A) $15,860 B) $5,460 C) $24,700 D) $21,320

Explanation / Answer

Depreciation is a non cash expense. so it will not include while calculating cash disbursments.

Answer is: D) $21,320

Variable selling and administrative costs ($4.20*1,300) $    5,460 Add: Fixed selling and administrative cost $ 19,240 Less; Depreciation $ (3,380) Cash disbursments for selling and administrative expenses $ 21,320

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