Pearl,Inchas Prepared the Operating Budget for the First Quarter of the Year.The

question 118

Multiple Choice

Pearl,Inc.has prepared the operating budget for the first quarter of the year.The company forecast sales of $40,000 in January,$50,000 in February,and $60,000 in March.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: $8000 per month
Rent expense: $5000 per month
Depreciation expense: $1400 per month
Power cost/fixed portion: $800 per month
Miscellaneous expenses/fixed portion: $1200 per month
Calculate total budgeted selling and administrative expenses for the month of January.

• A)$30,400
• B)$37,400
• C)$14,000
• D)$33,900

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Definitions:

Qualitative Characteristic

A feature or attribute of accounting information, such as relevance or reliability, which enhances its usefulness for decision-making.

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment or project, calculated by discounting all cash flows to their present value using a specified discount rate.

Future Cash Inflows

Expected receipts of cash in the future from various sources, including operations, investments, and financing activities.

Rate of Return

The profit or loss of an investment over a particular period, represented as a proportion of the initial investment amount.