Question

dministrative Expense Budget

Green Earth Landscaping Company provides monthly and weekly landscaping and maintenance services to residential customers in the tri-city area. Green Earth has no variable administrative expense. Fixed administrative expenses for June, July, and August include:

Salaries	$9,500
Insurance	2,050
Depreciation	3,400
Accounting services	800

Required:

1. Construct an administrative expense budget for Green Earth Landscaping Company for the three summer months. Show total amounts by month and in total for the three-month period.

Green Earth Landscaping Company
Administrative Expense Budget
For the Summer Months
	June	July	August	Total
Salaries	$	$	$	$
Insurance
Depreciation
Accounting services
Total administrative expense	$	$	$	$

2. What if Green Earth Landscaping Company's insurance rates increased at the beginning of July to $3,000 per month? How would that affect monthly administrative expense?

Total monthly administrative cost would   by $.

Answer 1

* Fixed expenses remain the same each month as given in Requirement 1

Green Earth Landscaping Company
Administrative Expense Budget
For the Summer Months
	June	July	August	Total
Salaries	9500	9500	9500	28,500
Insurance	2050	2050	2050	6150
Depreciation	3400	3400	3400	10,200
Accounting services	800	800	800	2400
Total administrative expense	15750	15750	15750	47250

* In Requirement 2, insurance cost (fixed) will be $3000 per month in place of $2050, for remianing 6 months of the period. After this effect, the three month budget will be--

Green Earth Landscaping Company
Administrative Expense Budget
For the Summer Months
	June	July	August	Total
Salaries	9500	9500	9500	28,500
Insurance	3000	3000	3000	9000
Depreciation	3400	3400	3400	10,200
Accounting services	800	800	800	2400
Total administrative expense	16700	16700	16700	50,100