Lawes Corporation manufactures and sells a single product. The company uses unit

Question

Lawes Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During July, the company budgeted for 5,000 units, but its actual level of activity was 5,050 units. The company has provided the following data concerning the formulas to be used in its budgeting:

The selling and administrative expenses in the planning budget for July would be closest to:

$20,500

$20,805

$20,800

$20,705

Fixed element per month Variable element per unit Revenue - $ 34.70 Direct labor $ 0 $ 6.00 Direct materials 0 13.20 Manufacturing overhead 31,000 1.90 Selling and administrative expenses 20,300 0.10 Total expenses $ 51,300 $ 21.20

Explanation / Answer

selling and administrative expenses =Fixed cost+Variable costs

=20300+(0.1*5000)

which is equal to

=$20800.

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