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26 January, 14:44

Warshaw Company is preparing the June Budget. The June budget includes the following dа ta: Sales $100,000 Purchases of Merchandise $95,000 Depreciation of office equipment in Accounting Department $2378 Insurance $11314 Payroll expenses $5234 a month plus 2% of sales (for sales and administrative personnel) Administrative office expenses incurred to order purchases are budgeted at 4% of purchases of merchandise only Purchase of equipment $4650 Research and Development 8% of sales What is total operating expense for June?

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  1. 26 January, 16:33
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    total operating expense is $32726

    Explanation:

    Given data

    Sales = $100,000

    Purchases of Merchandise = $95,000

    Depreciation in Accounting Department = $2378

    Insurance = $11314

    Payroll expenses = $5234 + 2% sales = 5234 + 2000 = $7234

    Administrative office expenses = 4% of purchases of merchandise = 0.04*95000 = $3800

    Research and Development = 8% of sales = 0.08*100000 = $8000

    Purchase of equipment = $4650

    to find out

    total operating expense for June

    solution

    we will find total operation expense that will be equal to sum of depreciation, insurance, payroll expenses and admin and Research and Development expenses

    so

    we know

    total operating expense for June = Depreciation + Insurance + Payroll expense + Administrative office expenses + Research and Development expense

    total operating expense = 2378 + 11314 + 7234 + 3800 + 8000

    total operating expense is $32726
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