Edington Company combines its operating expenses for budget purposes in a sellin

Question

Edington Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first 6 months of 2008, the following data are available.

Sales: 20,000 units quarter 1; 22,000 units quarter 2.

Variable costs per dollar of sales: Sales commissions 5%, delivery expense 2%, and advertising 3%.

Fixed costs per quarter: Sales salaries $10,000, office salaries $6,000, depreciation $4,200, insurance $1,500, utilities $800, and repairs expense $600.

Unit selling price: $20.

Prepare a selling and administrative expense budget by quarters for the first 6 months of 2008. (List amounts from largest to smallest eg 10, 5, 3, 2.)

EDINGTON COMPANY
Selling and Administrative Expense Budget

For the Six Months Ending June 30, 2008


Quarter


Six


1


2


Months
Budgeted sales in units

Variable expenses
$ $ $







Total variable






Fixed expenses











Total fixed





Total selling and administrative expenses

$


$


$

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Explanation / Answer

1st Quarter 2nd Quarter Sales 20,000.00 22,000.00 Unit Selling Price 20.00 20.00 Sales Revenue 400,000.00 440,000.00 Variable Selling Expenses Sales Commissions 20,000.00 22,000.00 Delivery Expenses 8,000.00 8,800.00 Advertising Expenses 12,000.00 13,200.00 Total Variable Expenses 40,000.00 44,000.00 Fixed Expenses: Sales Salaries 10,000.00 10,000.00 Office Salaries 6,000.00 6,000.00 Depreciation 4,200.00 4,200.00 Insurance 1,500.00 1,500.00 Utilities 800.00 800.00 Repairs 600.00 600.00 Total Fixed Expenses 23,100.00 23,100.00 Total Selling and Administrative 63,100.00 67,100.00 Expenses

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