Question

Preparing an operating budget—selling and administrative expense budget

Consider the sales budget presented in Exercise E22-31. Slate’s selling and administrative expenses include the following:

Rent, \(2,000 per month

Salaries, \)4,000 per month

Commissions, 5% of sales

Depreciation, $1,000 per month

Miscellaneous expenses, 2% of sales

Prepare a selling and administrative expense budget for each of the three quarters of 2018 and totals for the nine-month period.

Short answer

Answer

The total budget S & A spending is $ 97,650.

Step-by-step solution

Preparation of selling and administrative budget

	March 31	June 30	September 30	Total
Salaries	$6,000	$6,000	$6,000	$18,000
Rent	$12,000	$12,000	$12,000	$36,000
Commissions	$7,000	$9,500	$8,250	$24,750
Depreciation	$3,000	$3,000	$3,000	$9,000
Miscellaneous expense	$2,800	$3,800	$3,300	$9,900
Total budgeted S&A Expenses	$30,800	$34,300	$32,550	$97,650

Statement showing commissions

	March 31	June 30	September 30	Total
Budgeted sales	$140,000	$190,000	$165,000	$495,000
Commission	X 5%	X 5%	X 5%	X 5%
Commissions	$7,000	$9,500	$8,250	$24,750