Techgear, Inc., manufactures specialty suits for triathletes. For the month of J

Question

Techgear, Inc., manufactures specialty suits for triathletes. For the month of January, it projects the following selling and administrative expenses: sales commissions, 4% of sales; shipping expense, $4,500; advertising and marketing costs payable next month, $12,000; electric and water utilities, $750; corporate office depreciation for computers, $8,800; bad debt expense, $8,000. Sales for the month of January equal $400,000. What is the total of cash costs that will be reported on the cash budget?

A : $21,250

B : $50,050

C : $41,250

D : $33,250

Explanation / Answer

Answer :- Option B). $ 50,050.

Explanation :- Total cash costs = 400000 * 4 % + 4500 + 12000 + 750 + 8800 + 8000

= 16000 + 4500 + 12000 + 750 + 8800 + 8000

= $ 50,050. (Option B).

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