Question

Weller Company's budgeted unit sales for next year are provided below:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Budgeted unit sales 15,000 16,000 14,000 13,000
The company’s variable selling and administrative expense per unit is $2.50. Fixed selling and administrative expenses include advertising expenses of $8,000 per quarter, executive salaries of $35,000 per quarter, and depreciation of $20,000 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 $8,000 will be paid in the second quarter.

Required:
Prepare the company’s selling and administrative expense budget for next year.
We need for the expense budget:
variable selling and administrative expenses
total fixed and selling administrative expenses
total selling and administrative expenses
less: depreciation
cash disbursements for selling and administrative expenses

Note: Round "Per Unit" answers to 2 decimal places.

Answer 1

To prepare Weller Company’s selling and administrative expense budget for next year, we will calculate the variable selling and administrative expenses, the total fixed selling and administrative expenses, total selling and administrative expenses, less depreciation, and the cash disbursements for selling and administrative expenses.

### Selling and Administrative Expense Budget

#### Variable Selling and Administrative Expenses

- **Variable selling and administrative expense per unit:** $2.50

Calculating for each quarter:

1. **1st Quarter:**
- Budgeted unit sales: 15,000
- Variable selling and administrative expenses: 15,000 units × $2.50/unit = **$37,500**

2. **2nd Quarter:**
- Budgeted unit sales: 16,000
- Variable selling and administrative expenses: 16,000 units × $2.50/unit = **$40,000**

3. **3rd Quarter:**
- Budgeted unit sales: 14,000
- Variable selling and administrative expenses: 14,000 units × $2.50/unit = **$35,000**

4. **4th Quarter:**
- Budgeted unit sales: 13,000
- Variable selling and administrative expenses: 13,000 units × $2.50/unit = **$32,500**

#### Fixed Selling and Administrative Expenses

- **Advertising expenses:** $8,000 per quarter
- **Executive salaries:** $35,000 per quarter
- **Depreciation:** $20,000 per quarter
- **Insurance payments:** $5,000 in 1st and 3rd quarters
- **Property taxes:** $8,000 in the 2nd quarter

Calculating the total fixed selling and administrative expenses including additional costs per quarter:

1. **1st Quarter:**
- Total Fixed Expenses:
\[
8,000 + 35,000 + 20,000 + 5,000 = 68,000
\]

2. **2nd Quarter:**
- Total Fixed Expenses:
\[
8,000 + 35,000 + 20,000 + 8,000 = 71,000
\]

3. **3rd Quarter:**
- Total Fixed Expenses:
\[
8,000 + 35,000 + 20,000 + 5,000 = 68,000
\]

4. **4th Quarter:**
- Total Fixed Expenses:
\[
8,000 + 35,000 + 20,000 = 63,000
\]

#### Total Selling and Administrative Expenses

Now, we can calculate the total selling and administrative expenses for each quarter by adding the variable and fixed expenses:

1. **1st Quarter:**
- Total Expenses:
\[
37,500 + 68,000 = 105,500
\]

2. **2nd Quarter:**
- Total Expenses:
\[
40,000 + 71,000 = 111,000
\]

3. **3rd Quarter:**
- Total Expenses:
\[
35,000 + 68,000 = 103,000
\]

4. **4th Quarter:**
- Total Expenses:
\[
32,500 + 63,000 = 95,500
\]

#### Less: Depreciation

Depreciation is subtracted from the total expenses:

1. **1st Quarter:**
- Cash Disbursements:
\[
105,500 - 20,000 = 85,500
\]

2. **2nd Quarter:**
- Cash Disbursements:
\[
111,000 - 20,000 = 91,000
\]

3. **3rd Quarter:**
- Cash Disbursements:
\[
103,000 - 20,000 = 83,000
\]

4. **4th Quarter:**
- Cash Disbursements:
\[
95,500 - 20,000 = 75,500
\]

### Summary of Selling and Administrative Expense Budget

| Quarter | Variable Selling & Administrative Expenses | Fixed Selling & Administrative Expenses | Total Selling & Administrative Expenses | Less: Depreciation | Cash Disbursements for Selling & Administrative Expenses |
|------------------|--------------------------------------------|----------------------------------------|----------------------------------------|---------------------|----------------------------------------------------------|
| 1st Quarter | $37,500 | $68,000 | $105,500 | $20,000 | $85,500 |
| 2nd Quarter | $40,000 | $71,000 | $111,000 | $20,000 | $91,000 |
| 3rd Quarter | $35,000 | $68,000 | $103,000 | $20,000 | $83,000 |
| 4th Quarter | $32,500 | $63,000 | $95,500 | $20,000 | $75,500 |

This budget provides a comprehensive overview of Weller Company’s projected selling and administrative expenses for the coming year.