40. Selling and Administrative Budget and Budgeted Income Statement. (The previo

Question

40. Selling and Administrative Budget and Budgeted Income Statement. (The previous problem must be completed before working this problem.) Sports Bars, Inc., produces energy bars. Management estimates all selling and administrative costs are fixed. Quarterly selling and administrative cost estimates for the coming year follow. Salaries Rent Advertising $120,oo0 Depreciation 75,000 Other S170,000 $ 65,000 36,000 Required a. Use the information presented previously to prepare a selling and administrative budget. Refer to the format shown in Figure 9.8 "Selling and Administrative Budget for Jerry's Ice Cream. b. Use the information from the previous problem and from requirement a of this problem to prepare a budgeted income statement. Refer to the format shown in Figure 9.9 "Budgeted Income Statement for Jerry's Ice Cream". c. How will management use the information presented in the budgeted income statement?

Explanation / Answer

40(a) selling and administration overhead.

Quarter 1. 2. 3. 4. Total

Salaries. 42500. 42500. 42500. 42500 170000

Rent. 16250. 16250. 16250. 16250. 65000   

Advertising. 30000. 30000. 30000. 30000. 120000

Depreciation. 18750. 18750. 18750. 18750. 75000

Others. 9000. 9000. 9000. 9000. 36000

Total S/A 116500. 116500. 116500. 116500. 466000

Dep. (18750). (18750). ( 18750). (18750). (75000)

Cash pay. 97750. 97750. 97750. 97750. 391000

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