Question

Wala Inc. bases its selling and administrative expense budget on the number of units sold. The variable selling and administrative expense is $4.60 per unit. The budgeted fixed selling and administrative expense is $30,200 per month, which includes depreciation of $3,470. The remainder of the fixed selling and administrative expense represents current cash flows. The sales budget shows 3,500 units are planned to be sold in July.

Required:

Prepare the selling and administrative expense budget for July.

Answer 1

Wala Inc Selling and Administrative Expense Budget For the Month Ended July Budgeted unit sales Variable selling and administrative expense per unit S Variable selling and administrative expense $ Fixed selling and administrative expense $ Total selling and administrative expense $ Less depreciation $ Cash disbursement for selling and administrative expenses S 3500 4.60 16,100 30,200 46,300 3,470 42,830 Working Notes: Variable selling and administrative expense = 3,500*$4.60 = $16,100