The orr company sells only one product called a bobb, the company is in the proc
ID: 2582861 • Letter: T
Question
The orr company sells only one product called a bobb, the company is in the process of preparing its selling and adminstrative expense budget for the last half of the year. the following budget data are available.
Depreciation on office equipment
other
--------
R0,45
R15 000
R 25 000
All of these expenses (except depreciation ) are paid in cash in the month they are incurred.
1. If the company has budgeted to sell 30 000 Bobbs in august, then the total budgeted selling and adminstrative expenses per unit sold for august is how much?
2. If the company has budgeted to sell 26 000 Bobbs in November , then the total budgeted variable selling and adminstrative expenses in November will be how much?
3. If the company has budgeted to sell 28 00 Bobbs in september , then the total budgeted fixed selling and adminstartive expenses for september is how much?
4. if the budgeted cash disbursements for selling and adminstrative expenses for October total R 160 500, then how many bobbs does the company plan to sell in October?
variable cost per Bobb Monthly fixed cost Sales commisioning R 0,90 -------- Shipping R 1,40 -------- Advertising R 0,40 R10 000 Executive salaries --------- R 40,000Depreciation on office equipment
other
--------
R0,45
R15 000
R 25 000
Explanation / Answer
1. Budgeted to sell 30 000 Bobbs in August, then the total budgeted selling and adminstrative expenses per unit sold for August is 1. Total S& A For August 1 2=1*30000 3 4=2+3 Variable cost per Bobb Total Variable cost Fixed costs Total costs Sales commisioning 0.9 27000 27000 Shipping 1.4 42000 42000 Advertising 0.4 12000 10000 22000 Executive salaries 40000 40000 Depreciation on office equipment 15000 15000 other 0.45 13500 25000 38500 Total 94500 90000 184500 Total Per unit (30000) 3.15 3 6.15 Total Budgeted S&A exp. In August 184500 S&A exp. Per unit budgeted 6.15 2. Total S& A For November 1 2=1*26000 3 4=2+3 Variable cost per Bobb Total Variable cost Fixed costs Total costs Sales commisioning 0.9 23400 23400 Shipping 1.4 36400 36400 Advertising 0.4 10400 10000 20400 Executive salaries 40000 40000 Depreciation on office equipment 15000 15000 other 0.45 11700 25000 36700 Total 81900 90000 171900 Total Per unit (26000) 3.15 3.46 6.61 Total Budgeted Variable S&A exp. In November= 26000*3.15= 81900 3. Total S& A For September 1 2=1*28000 3 4=2+3 Variable cost per Bobb Total Variable cost Fixed costs Total costs Sales commisioning 0.9 25200 25200 Shipping 1.4 39200 39200 Advertising 0.4 11200 10000 21200 Executive salaries 40000 40000 Depreciation on office equipment 15000 15000 other 0.45 12600 25000 37600 Total 88200 90000 178200 Total Per unit (28000) 3.15 3.21 6.36 Total Budgeted Fixed S&A exp. In September 90000 4 Total S&A exp. budgeted for October 160500 Total Fixed costs 90000 Total Variable costs 70500 Variable cost /unit 3.15 So, No.of Bobbs planned to sell=70500/3.15= 22381 Verification 4. Total S& A For October 1 2=1*22381 3 4=2+3 Variable cost per Bobb Total Variable cost Fixed costs Total costs Sales commisioning 0.9 20143 20143 Shipping 1.4 31333 31333 Advertising 0.4 8952 10000 18952 Executive salaries 40000 40000 Depreciation on office equipment 15000 15000 other 0.45 10071 25000 35071 Total 70500 90000 160500 Total Per unit (30000) 3.15 4.02 7.17 Total Budgeted S&A exp. In August 160500 S&A exp. Per unit budgeted 7.17
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