Answer:
The correct answer is A.
Explanation:
Giving the following information:
The company forecast sales:
January= $40,000
Variable and fixed selling and administrative expenses are as follows:
Variable Expenses:
Power cost (30% of sales)
Miscellaneous expenses: (5% of sales)
Fixed Expenses:
Salaries expense= $10,000 per month
Rent expense: $5,000 per month
Depreciation expense: $1,200 per month
Power cost/fixed portion: $800 per month
Miscellaneous expenses/fixed portion: $1,200 per month
Total= $18,200
For January
Total variable cost= 40,000*0.3 + 40,000*0.05= $14,000
Total fixed cost= 18,200
Total cost= $32,200
Answer: A. $32,200
Explanation:
The following details are are applicable to the month of January ;
Fixed expenses:
Rent = $5,000
Salary = $10,000
depreciation = $1,200
Fixed Miscellaneous = $1,200
Fixed power = $800
Total fixed expenses = $5,000 + $10,000 + $1,200 + $1,200 + $800 = $18,200
Forecasted January sale = $40,000
Variable expenses:
Power = 30% of sales = 0.3 × $40,000 = $12,000
Miscellaneous = 5% of sales = 0.05 × $40,000 = $2000
Total variable expenses = $12,000 + $2000 = $14,000
Therefore, total selling and administrative expenses for january is given by;
Selling expenses(total variable expenses) + administrative expenses( total fixed expenses)
= $18,200 + $14,000 = $32,200
