Review the following SG&A; budget that was prepared at the beginning of the curr

Question

Review the following SG&A; budget that was prepared at the beginning of the current year. The economy appears to be slowing, and sales are now expected to run only 80% of plan. How much can now be expected to result for total SG&A;? The only fixed cost that can be reduced relates to the advertising campaign. of attempting to save money by cutting a portion of the advertising budget? What are the possible impacts Selling, General, and Administrative Budget For the Year Ending December 31, 20X7 85,000 X $5.00 5425,000 Estimated units sold X Per unit variable SG&A; Total variable SG&A; Fixed 5G&A; Salaries Office Advertising Other 467,500 102,000 297,500 42,500 $909,500 Total fixed SG&A; Total budgeted SG&A;

Explanation / Answer

Since variable cost will change according to the change in the estimated units sales, hence changed and fixed cost will not effect of change in unit sales, hence there is no change in the fixed cost.

Selling,General and Administrative Budget For the year ending december 31,20X7 Estimated units sold (85000*80%) 68000 X per unit variable SG&A 5 Total variable SG&A 340000 Fixed SG&A Salaries 467500 Office 102000 advertising 297500 other 42500 Total Fixed SG&A 909500 Total Budgeted SG&A 1249500

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