Problem

Operating expense budget In addition to the information presented in Mini-Exercise 1...

Operating expense budget In addition to the information presented in Mini-Exercise 14.1, the following cost behavior patterns are budgeted for ABC Company’s operating expenses each month:

Fixed costs: salaries, $2,000; rent, $5,000; depreciation, $2,400; advertising, $3,200

Mixed costs: utilities, $3,000 1 $0.50 per unit

Variable costs per unit sold: sales commissions, $2.00; marketing promotions, $1.00; supplies, $0.75; bad debt expense, $0.25

Required:

Prepare ABC Company’s operating expense budget for June, July, and August.

Refer to Mini-Exercise 14.1:

Production budget ABC Company’s budgeted sales for June, July, and August are 12,000, 16,000, and 14,000 units, respectively. ABC requires 30% of the next month’s budgeted unit sales as finished goods inventory each month. Budgeted ending finished goods inventory for May is 3,600 units.

Required:

Calculate the number of units to be produced in June and July.

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