24. The selling and administrative expense budget of Breckinridge Corporation is

Question

24. The selling and administrative expense budget of Breckinridge Corporation is based on budgeted unit sales, which are 5,500 units for June. The variable selling and administrative expense is S1.00 per unit. The budgeted fixed selling and administrative expense is $101,200 per month, which includes depreciation of $6,050 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The selling and administrative expenses on the June budgeted Income Statement should be: A. $100,650 B. $106,700 C. $5,500 D. $95,150 E. $101,200 25. Veltri Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.77 direct labor-hours. The direct labor rate is $11.20 per direct labor-hour. The production budget calls for producing 7,100 units in October and 7,500 units in November. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 5,480 hours in total each month even if there is not enough work to keep them busy. What would be the total combined direct labor cost for the two months? A. $122,752.00 B. $127,708.00 C. $125,910.40 D. $127,562.40 E. $158,396.00 26. Walsh Company expects sales of Product W to be 60,000 units in April, 75,000 units in May and 70,000 units in June. The company desires that the inventory on hand at the end of each month be during March, on March 31 there were 25,000 units of Product W in the ending inventory. Given this information, Walsh Company's production of Product W for the month of April should be: A. 60,000 units B. 65,000 units C. 75,000 units D. 66,000 units equal to 40% of the next month's expected unit sales. Due to excessive production

Explanation / Answer

Answers

This is because, in Income statement, expenses are recognised for the period whether they are paid in cash or not. Total selling & admin expenses to be taken to income summary will be:
Variable expenses = 5500 units x $1 per unit = $5,500
Fixed expenses (including depreciation) = $101,200

Total = 5500 + 101200 = $106,700 = Option – B

Total units = 7100 + 7500 = 14,600 units in 2 months
Total direct labor hours in 2 months required to be paid = 14600 units x 0.77 DLH per unit = 11,242 direct labor hours.

Combined direct labor cost will be 11,242 labor hours x $11.2 per direct labor hour = $125,910.4

Hence, answer is Option – C $125,910.40

April Budgeted Sale units = 60000
Add: Desired ending inventory = 75000 units of May x 40% = 30000 units
Total required = 60000 units + 30000 units = 90,000 units
Less: Units already available as beginning inventory = 25000 units.

Units required to be produced will be 90000 units – 25000 units = 65,000 units

Hence, the answer is Option – B 65,000 units

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