The budgeted unit sales of Weller Company for the upcoming fiscal year are provided below:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Budgeted unit sales 29,000 30,000 22,000 27,000

The company's variable selling and administrative expense per unit is $2.80. Fixed selling and administrative expenses include advertising expenses of $14,000 per quarter, executive salaries of $47,000 per quarter, and depreciation of $28,000 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 $7,800 will be paid in the second quarter.

Required:

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

Weller Company

Selling and Administrative Expense Budget for the upcoming year:

First Quarter

Variable = $302,400 (($2.80 x (29,000 + 30,000 + 22,000 + 27,000))

Fixed:

Advertising = $56,000 ($14,000 x 4)

Executive Salaries = $188,000 ($47,000 x 4)

Depreciation = $112,000 ($28,000 x 4)

Insurance = $10,000 ($5,000 x 2)

Property Taxes = $7,800

Total = $672,200

Explanation:

A budget is a projection into the future about the activities of an entity. It is used for planning and decision making, especially when the budget is compared with the actual performances to obtain variances.

The total variable for the year is obtained by adding up the budgeted unit sales for the quarters and multiplying by the variable expense per unit.

The fixed costs total $373,800. The Advertising, Executive Salaries, and Depreciation costs would be incurred each quarter. So their sums were obtained by multiplying a quarter's total cost by 4.

Insurance cost would be incurred only in two quarters and Property Taxes in one quarter only.