The selling and administrative expense budget of Garney Corporation is based on the number of units sold, which are budgeted to be 1,800 units in October. The variable selling and administrative expense is $2.00 per unit. The budgeted fixed selling and administrative expense is $22,680 per month, which includes depreciation of $7,020. The remainder of the fixed selling and administrative expense represents current cash flows.

126. The selling and administrative expense budget of Garney Corporation is based on the number of units sold, which are budgeted to be 1,800 units in October. The variable selling and administrative expense is $2.00 per unit. The budgeted fixed selling and administrative expense is $22,680 per month, which includes depreciation of $7,020. The remainder of the fixed selling and administrative expense represents current cash flows.

           

            Required:

           

            Prepare the selling and administrative expense budget for October.

            Ans: 

	October
Budgeted unit sales....................................................................	1,800
Variable selling and administrative expense per unit................	$2.00
Budgeted variable expense.........................................................	$ 3,600
Budgeted fixed selling and administrative expense...................	22,680
Total budgeted selling and administrative expense...................	26,280
Less depreciation........................................................................	7,020
Cash disbursements for selling and administrative expenses....	$19,260

            AACSB:  Analytic     AICPA BB:  Critical Thinking     AICPA FN:  Reporting, Measurement     LO:  7     Level:  Easy

    127. Romeiro Corporation is preparing its cash budget for September. The budgeted beginning cash balance is $46,000. Budgeted cash receipts total $160,000 and budgeted cash disbursements total $152,000. The desired ending cash balance is $70,000. The company can borrow up to $120,000 at any time from a local bank, with interest not due until the following month.

           

            Required:

           

            Prepare the company's cash budget for September in good form.

            Ans: 

           

Cash balance, beginning...........................................................	$ 46,000
Add cash receipts.....................................................................	160,000
Total cash available..................................................................	206,000
Less cash disbursements..........................................................	152,000
Excess (deficiency) of cash available over disbursements......	54,000
Borrowings...............................................................................	16,000
Cash balance, ending................................................................	$ 70,000

            AACSB:  Analytic     AICPA BB:  Critical Thinking     AICPA FN:  Reporting, Measurement     LO:  8     Level:  Easy

    128. Zolezzi Inc. is preparing its cash budget for March. The budgeted beginning cash balance is $42,000. Budgeted cash receipts total $178,000 and budgeted cash disbursements total $175,000. The desired ending cash balance is $50,000. The company can borrow up to $160,000 at any time from a local bank, with interest not due until the following month.

           

            Required:

           

            Prepare the company's cash budget for March in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance.

            Ans: 

Cash balance, beginning........................................................	$ 42,000
Add cash receipts...................................................................	178,000
Total cash available...............................................................	220,000
Less cash disbursements........................................................	175,000
Excess (deficiency) of cash available over disbursements....	45,000
Borrowings............................................................................	5,000
Cash balance, ending.............................................................	$ 50,000

            AACSB:  Analytic     AICPA BB:  Critical Thinking     AICPA FN:  Reporting, Measurement     LO:  8     Level:  Easy

The Puyer Corporation makes and sells only one product called a Deb. The company is in the process of preparing its Selling and Administrative Expense Budget for next year. The following budget data are available:

The Puyer Corporation makes and sells only one product called a Deb. The company is in the process of preparing its Selling and Administrative Expense Budget for next year. The following budget data are available:

	Monthly Fixed Cost		Variable Cost Per Deb Sold
Sales commissions			$	0.90
Shipping			$	1.40
Advertising	$	50,000	$	0.20
Executive salaries	$	60,000
Depreciation on office equipment	$	20,000
Other	$	40,000

All of these expenses (except depreciation) are paid in cash in the month they are incurred.

If the company has budgeted to sell 16,000 Debs in January, then the total budgeted variable selling and administrative expenses for January will be:

Multiple Choice

• $36,800
• $25,600
• $17,600
• $40,000

  Correct

Explanation

	Variable Cost Per Deb Sold
Sales commissions	$	0.90
Shipping		1.40
Advertising		0.20
Total	$	2.50

Budgeted variable selling and administrative expense = $2.50 per unit × 16,000 units = $40,000

Weller Company's budgeted unit sales for the upcoming fiscal year are provided below:

Weller Company's budgeted unit sales for the upcoming fiscal year are provided below:

The company’s variable selling and administrative expense per unit is $2.20. Fixed selling and administrative expenses include advertising expenses of $8,000 per quarter, executive salaries of $41,000 per quarter, and depreciation of $22,000 per quarter. In addition, the company will make insurance payments of $5,000 in the first quarter and $5,000 in the third quarter. Finally, property taxes of $7,400 will be paid in the second quarter.

Required:

Prepare the company’s selling and administrative expense budget for the upcoming fiscal year.

 

Thanks