What is the budgeted variable operating expense for January 20x47 (Use the follo

Question

What is the budgeted variable operating expense for January 20x47 (Use the following data to answer this question.) 20X4 ANNUAL BUDGET AMOUNT PERCENT EARNINGS COST OF CONSTRUCTION $1,000.000 100 LABOR MATERIALS SUBCONTRACTS 250,000 450,000 50,000 750,000 250,000 25 45 5 75 25 TOTAL DIRECT COST GROSS MARGIN VARIABLE OPER. EXPENSE AUTO AND TRUCK INDIRECT LABOR 20,000 30,000 50,000 2 TOTAL VARIABLE OPER. EXP FIXED OPER. EXPENSE 5 DEPRECIATION RENT OTHER 12,000 99,600 38,400 150,000 200,000 $50,000 TOTAL FIXED OPER. EXPENSE TOTAL OPER. EXPENSE NET PROFIT

Explanation / Answer

Variable operating expense is based on sales volume.

Variable operating expense for January:

= Total variable operating expenses×Sales for January (in%)

= $50,000×4%

= $2,000

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