The selling and administrative expense budget of Gullette Corporation is based on the number of units sold, which are budgeted to be 3,700 units in April. The variable selling and administrative expense is $4.80 per unit. The budgeted fixed selling and administrative expense is $30,180 per month, which includes depreciation of $3,450. The remainder of the fixed selling and administrative expense represents current cash flows. Required:Prepare the selling and administrative expense budget for April. AprilBudgeted unit sales Variable selling and administrative expense per unit Variable selling and administrative expense Fixed selling and administrative expense Total selling and administrative expense Cash disbursements for selling and administrative expenses

Gullette Corporation

Gullette Corporation

Selling and administrative expense budget for April:

April Budgeted unit sales = 3,700

Variable selling and administrative expense per unit = $4.80

Variable selling and administrative expense = $17,760

Fixed selling and administrative expense =     $30,180

Total selling and administrative expense =     $47,940

Less Depreciation expense =                           ($3,450)

Cash disbursements for selling and

  administrative expenses                               $44,490

Explanation:

Data:

Budgeted units sales = 3,700

Variable selling and administrative expense = $4.80 per unit

Budgeted fixed selling and administrative expense = $30,180 per month

Depreciation in fixed expense = $3,450

Gullette Corporation

Selling and administrative expense budget for April:

April Budgeted unit sales = 3,700

Variable selling and administrative expense per unit = $4.80

Variable selling and administrative expense = $17,760

Fixed selling and administrative expense =     $30,180

Total selling and administrative expense =     $47,940

Less Depreciation expense =                           ($3,450)

Cash disbursements for selling and

  administrative expenses                               $44,490

b) Under the budgetary process, Gullette Corporation prepares its selling and administrative expense budget to include the variable and fixed elements.  The variable element of Gullette's selling and administrative expenses varies per unit with the volume of sales, while the fixed element remains relatively constant in total.  The total cash disbursements for selling and administrative expenses do not include depreciation.

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