Bear Corp, sells its product for $110. Forecasted sales are 1,800 units in Octob

Question

Bear Corp, sells its product for $110. Forecasted sales are 1,800 units in October, 1,900 in November, and 1,700 in December. Variable costs are based on sales, and consist of commissions (5% of sales), advertising (4%) and shipping (3%) Fixed costs per month are $4,000 sales salaries, $3,300 office salaries, $2,100 depreciation, $2,100 office rent, S850 insurance and $900 utilities. Required: Prepare Bear Corp's selling and administrative expense budget for the period October through December. Present monthly totals as well as a 3-month total. October November December Total o So So S Sales in Units Solling Price Budgeted Sales Variable: Commissions 5% Advertising 4% Shipping 3% Total Variable Sales Salaries Office Salaries Depreciation Office Rent Insurance ulities Total Fixed Total S&A;

Explanation / Answer

OCT NOV DEC TOTAL Sales in Units 1800 1900 1700 5400 Selling Price 110 110 110 110 Budgeted sales 198000 209000 187000 594000 Variable Commissions (5%) 9900 10450 9350 29700 Advertising (4%) 7920 8360 7480 23760 Shipping (3%) 5940 6270 5610 17820 Total variable 23760 25080 22440 71280 Sales salaries 4000 4000 4000 12000 Office salaries 3300 3300 3300 9900 Depreciation 2100 2100 2100 6300 Office rent 2100 2100 2100 6300 Insurance 850 850 850 2550 Utilities 900 900 900 2700 Total fixed 13250 13250 13250 39750 Total S&A 37010 38330 35690 111030

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