Question

irkland Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first 6 months of 2020, the following data are available.

1.		Sales: 20,800 units quarter 1; 22,100 units quarter 2.
2.		Variable costs per dollar of sales: sales commissions 5%, delivery expense 2%, and advertising 3%.
3.		Fixed costs per quarter: sales salaries $10,900, office salaries $6,160, depreciation $4,490, insurance $2,080, utilities $880, and repairs expense $670.
4.		Unit selling price: $24.

Prepare a selling and administrative expense budget by quarters for the first 6 months of 2020. (List variable expenses before fixed expense.)

KIRKLAND COMPANY Selling and Administrative Expense Budget For the Quarter Ending June 30, 2020For the Six Months Ending June 30, 2020June 30, 2020
	Quarter
	1		2		Six Months

Answer 1

Selling and administrative expenses budget is prepared as follows:

	Quarter 1	Quarter 2	Six Months
Sales in units (a)	499,200	530,400	1,029,600
	(20,800 * $24)	(22,100 * $24)	(42,900 * $24)
Variable Cost:
Sale commission (a* 5%)	24,960	26,520	51,480
Delivery Expenses (a* 2%)	9,984	10,608	20,592
Advertising (a* 3%)	14,976	15,912	30,888
Total Variable Cost:	$49,920	$53,040	$102,960
Fixed Cost:
Sales salaries	10,900	10,900	21,800
Office salaries	6,160	6,160	12,320
Depreciation	4,490	4,490	8,980
insurance	2,080	2,080	4,160
utilities	880	880	1,760
repairs expense	670	670	1,340
Total Fixed Cost:	$25,180	$25,180	$50,360
Total Selling and administrative expenses	$75,100	$78,220	$153,320