The following budget information is given for Shaheen Company for the last quart
ID: 2498293 • Letter: T
Question
The following budget information is given for Shaheen Company for the last quarter of 2015:
Expected sales for October are $100,000.
Monthly sales are expected to increase 6% in November and 12% in December.
Required:
Prepare an operating expense budget, separating variable (listed first with a total) and fixed expense (listed second with a total) prior to totaling the Operating Expenses together, for the last quarter of 2015, showing each month in detail and the total quarter.
Round each expense to the nearest dollar.
Monthly expenses: Monthly salary = $8,000 Sales commissions = 14% of sales Rent expense = $4,000 Depreciation expense = $1,800 Miscellaneous expense = 3.5% of sales Advertising expense = 5.5% of salesExplanation / Answer
Operating Expense budget from October to December 2015
Particulars
October
November
December
Quarter
Variable Expense
Sales commissions(14% of sales)
$14,000
$14,840
$15,680
$44,520
Advertising expense(5.5% of sales)
$5,500
$5,830
$6,160
$17,490
Miscellaneous expense(3.5% of sales)
$3,500
$3,710
$3,920
$11,130
TotalVariable Expense
$23,000
$24,380
$25,760
$73,140
Fixed expense
Monthly salary
$8,000
$8,000
$8,000
$24,000
Rent expense
$4,000
$4,000
$4,000
$12,000
Depreciation expense
$1,800
$1,800
$1,800
$5,400
Total Fixed expense
$13,800
$13,800
$13,800
$41,400
Total Expense
$36,800
$38,180
$39,560
$114,540
Sales
$100,000
$106,000
$112,000
$318,000
Operating Expense budget from October to December 2015
Quarter
Particulars
October
November
December
Variable Expense
Sales commissions(14% of sales)
$14,000
$14,840
$16,621
$45,461
Advertising expense(5.5% of sales)
$5,500
$5,830
$6,530
$17,860
Miscellaneous expense(3.5% of sales)
$3,500
$3,710
$4,155
$11,365
TotalVariable Expense
$23,000
$24,380
$27,306
$74,686
Fixed expense
$0
Monthly salary
$8,000
$8,000
$8,000
$24,000
Rent expense
$4,000
$4,000
$4,000
$12,000
Depreciation expense
$1,800
$1,800
$1,800
$5,400
Total Fixed expense
$13,800
$13,800
$13,800
$41,400
Total Expense
$36,800
$38,180
$41,106
$116,086
Sales
$100,000
$106,000
$118,720
$324,720
Operating Expense budget from October to December 2015
Particulars
October
November
December
Quarter
Variable Expense
Sales commissions(14% of sales)
$14,000
$14,840
$15,680
$44,520
Advertising expense(5.5% of sales)
$5,500
$5,830
$6,160
$17,490
Miscellaneous expense(3.5% of sales)
$3,500
$3,710
$3,920
$11,130
TotalVariable Expense
$23,000
$24,380
$25,760
$73,140
Fixed expense
Monthly salary
$8,000
$8,000
$8,000
$24,000
Rent expense
$4,000
$4,000
$4,000
$12,000
Depreciation expense
$1,800
$1,800
$1,800
$5,400
Total Fixed expense
$13,800
$13,800
$13,800
$41,400
Total Expense
$36,800
$38,180
$39,560
$114,540
Sales
$100,000
$106,000
$112,000
$318,000
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