Question

Exercise 9-12 ht Kirkdand 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. Sales: 20,700 units quarter 1; 22,700 units quarter 2. Variable costs per dollar of sales: sales commissions 5 % , delivery expense 2 %, and advertising 3 % Fixed costs per quarter: sales salaries $10,900, office salaries $6,120, depreciation $4,740, insurance $1,640, utilities $880, and repairs expense $680 1. 2. 3. 4. Unit selling price: $23. Prepare a selling and administrative expense budget by quarters for the first 6 months of 2020. (List variable expenses before fixed expense.) KERKLAND COMPANY Selling and Administrative Expense Budget Quarter 2 Six Months Study

Answer 1

KIRKLAND COMPANY Selling and Administrative Expense Budget for the six months Ending June 30, 2020 Quarter Six Months Budgeted sales in Units 20,700 22,700 Variable Expenses Advertising $ 14, 283 $15, 663 $ 29,946 Delivery Expense & 9,522 $10,442 $ 19,964 sales commissiers $ 23,805 & 26,105 $ 49,910 Total variable $ 47,610 $52,210 $ 99,820 fixed Expenses sales salaries $ 10,900 $10,900 $21,800 office salaries $ 6,120 $ 6, 120 $ 12,240 Depreciation $ 4,740 $4,740 $ 9,480 Insurance & 1,640 $ 1,640 $ 3,280 Utilities & 880 $ 800 $ 1,760 Repaires Expense $ 680 $ 680 $ 1,360 Total Fixed $ 24,960 $24,960 $ 49,920 Total selling and Administrative Expenses & 72,570 $77,170 $ 149,740

Calculation: Sales = Units sold x vnit selling Price Quarter to Sales - 20, too Units X $23 = $476,100 Quarter 2: Sales = 22, 700 units X $23 = $522, 100 Advertising - 3% of sales. Quarter 1. Advertising = 3% * $ 476,100 = $14,283 Quarter 2. Advertising = 3% + $522,100 = $ 15,663 Delivery expense = 2% of sales Quarter 1- Delivery expense = 2% & $476,100 2 $95 Quarter 2 - Delivery expense - 2% + $ 522,100 2 $10,442 Sales commussions - 5% of sales Ouarter 1. sales commissions - 57 x $476, 100. = $23,805 Quarter 2: sales commissions = 5% * $ 522,100 = $ 26,105