Warshaw company is preparing the june budget. the june budget includes the following data: 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?

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