Question

administrative 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 $9,400 Insurance 2,000 Depreciation 4,300 Accounting services 900 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.

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?

Answer 1

Administrative Expense Budget
	June	July	August	Total
Salaries	9,400	9,400	9,400	28,200
Insurance	2,000	2,000	2,000	6,000
Depreciation	4,300	4,300	4,300	12,900
Accounting services	900	900	900	2,700
Total administration expense	16,600	16,600	16,600	49,800

If insurance expense increased at the beginning of July $3,000 per month, monthly administrative expense will increase by $1,000 for July and August.