9. Scotch, Inc. has prepared the operating budget for the first quarter of the year. The company forecast sales of $50,000 in January, $60,000 in February, and $70,000 in March. Variable and fixed expenses are as follows: Variable Expenses: Power cost (20% of sales) Miscellaneous expenses: (5% of sales) Fixed Expenses: Salaries expense: $8,000 per month Rent expense: $5,000 per month Depreciation expense: $1,400 per month Power cost/fixed portion: $500 per month Miscellaneous expenses/fixed portion: $1,000 per month Using the information above, calculate the amount of selling and administrative expenses for the month of February.

$30,900

Explanation:

Given that,

Sales in February = $60,000

Variable Expenses:

Power cost (20% of sales)

Miscellaneous expenses: (5% of sales)

Fixed Expenses:

Salaries expense = $8,000 per month

Rent expense = $5,000 per month

Depreciation expense = $1,400 per month

Power cost/fixed portion = $500 per month

Miscellaneous expenses/fixed portion = $1,000 per month

Total variable expenses:

= Power Cost (20% of sales) + Miscellaneous Expenses (5% of sales)

= (0.2 × $60,000) + (0.05 × $60,000)

= $12,000 + $3,000

= $15,000

Total fixed expenses:

= Salaries Expenses + Rent expenses + Depreciation Expense + Power cost fixed + Misc Expenses Fixed

= $8,000 + $5,000 + $1,400 + $500 + $1,000

= $15,900

Total Selling and Admin Expenses in February:

= Total variable expenses + Total fixed expenses

= $15,000 + $15,900

= $30,900

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