Question
To complete the entire production budget, we need to add two more items related to production: the selling expenses and the administrative expenses. Some of
To complete the entire production budget, we need to add two more items related to production: the selling expenses and the administrative expenses. Some of these expenses are variable, like sales commissions, and data entry personnel, while other expenses, like insurance and property taxes happen no matter how many pairs of shoes we make or sell. These are our fixed expenses. So we are going to make some assumptions so we can start work on this budget.
Based on prior year's actual expenses, let's assume that the variable selling expenses of sales commission is calculated at 5% of unit sales. The fixed selling expenses. typically rent, depreciation expenses, advertising, and other office expenses. In our example, we will assume the following: rent, $500 per quarter, advertising, $300 per quarter; office expense, $200 per quarter.
Total Selling expenses for second and fourth quarter would be:
1) $6,125
2) None of these
3) $5,625
4) $6,500
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