Skeete Inc. bases its selling and administrative expense budget on the number of
ID: 2398640 • Letter: S
Question
Skeete Inc. bases its selling and administrative expense budget on the number of units sold. The variable selling and administrative expense is $4.90 per unit. The budgeted fixed selling and administrative expense is $30,300 per month, which includes depreciation of $3,570. The remainder of the fixed selling and administrative expense represents current cash flows. The sales budget shows 2,500 units are planned to be sold in November.
In the selling and administrative expense budget for November, calculate the amount of selling and administrative expense and calculate the amount cash disbursements for selling and administrative expenses.
Skeete Inc. bases its selling and administrative expense budget on the number of units sold. The variable selling and administrative expense is $4.90 per unit. The budgeted fixed selling and administrative expense is $30,300 per month, which includes depreciation of $3,570. The remainder of the fixed selling and administrative expense represents current cash flows. The sales budget shows 2,500 units are planned to be sold in November.
Total selling and administrative expense Cash disbursement for selling and administrative expenses 3Explanation / Answer
Variable selling and administrative expense ($4.90*2,500) $ 12,250 Add: Fixed selling and administrative expense $ 30,300 Total selling and administrative expense $ 42,550 Total selling and administrative expense $ 42,550 Less: Depreciation expense (non cash expense) $ (3,570) cash disbursements for selling and administrative expenses $ 38,980
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