20-21

QUESTION 20 The Branders Company, a merchandising firm, has budgeted its activity for December according to the following information: 1. Sales at $550,000, all for cash 2. Merchandise inventory on November 30 was $300,000 3. Budgeted depreciation for December is $35,000 4. The cash balance at December 1 was $25,000 5. Selling and administrative expenses are budgeted at $60,000 for December and are paid in cash. 6. The planned merchandise inventory on December 31 is $270,000 7. The invoice cost for merchandise purchases represents 75% of the sales price. All purchases are paid for in cash. The budgeted net income for December is $77,500 O $42,500 O $137,500 O $107,500 QUESTION 21 Rent expense on the factory building would be classified as O a general and administrative expense O a product cost O a period cost O a selling expense