Question

Valquez Manufacturing Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first quarter of 2016, the following data are developed:

1.   Sales: 20,000 units; unit selling price:                       $35

2.   Variable costs per dollar of sales:

            Sales commissions                                                6%

            Delivery expense                                                   2%

            Advertising                                                             4%

3.   Fixed costs per quarter:

            Sales salaries                                                $24,000

            Office salaries                                                  17,000

            Depreciation                                                       5,000

            Insurance                                                           1,000

            Utilities                                                               2,000

Instructions

Prepare a selling and administrative expense budget for the first quarter of 2016.

Answer 1

Valquez Manufacturing Company
Selling & Administrative Expense Budget
For the First Quarter of 2016
	Amount
Variable Costs:
Sales Commission - $700,000 X 6%	42,000.00
Delivery Expense - $700,000 X 2%	14,000.00
Advertising - $700,000 X 4%	28,000.00
Total Variable Selling & Administrative Expense	84,000.00
Fixed Costs:
Sales Salaries	24,000.00
Office Salaries	17,000.00
Depreciation	5,000.00
Insurance	1,000.00
Utilities	2,000.00
Total Fixed Selling & Administrative Expense	49,000.00
Total Selling & Administrative Expense	133,000.00