329 Blanchar Business Machines estimates its monthly selling

3-29 Blanchar Business Machines estimates its monthly selling expenses as follows: Advertising Sales salaries Sales calls on customers Commissions paid to sales personnel Delivery $22,000 per month $18,000 per month $35 per machine $50 per machine $20 per machine Assume that Blanchar pays selling expenses in the month after they are incurred. Based on current plans of Blanchar\'s sales department, monthly sales estimates are as follows March-80 units, April-90 units, May-100 units. June- 120 units. Required: Prepare a selling expense budget for the second quarter for Blanchar Business Machines

Solution

Preparation of Selling Expense Budget

Selling Expense Budget

Particulars

April

May

June

Total Second Quarter

Advertising

22,000

22,000

22,000

66,000

Sales Salaries

18,000

18,000

18,000

54,000

Sales Calls on customers

$35 x 90 units = 3,150

$35 x 100 units = 3,500

$35 x 120 units = 4,200

10,850

Commissions paid

$50 x 90 units = 4,500

$50 x 100 units = 5,000

$50 x 120 units = 6,000

15,500

Delivery

$20 x 90 units = 1,800

$20 x 100 units = 2,000

$20 x 120 units = 2,400

6,200

Total

152,550

NOTE: In the given question, we are required to prepare selling budget which is prepared on the accrual basis of accounting. Therefore, the payment of expenses is not required to solve the question. If cash budget was required to be prepared then we would have considered the payment months.

Particulars	April	May	June	Total Second Quarter
Advertising	22,000	22,000	22,000	66,000
Sales Salaries	18,000	18,000	18,000	54,000
Sales Calls on customers	$35 x 90 units = 3,150	$35 x 100 units = 3,500	$35 x 120 units = 4,200	10,850
Commissions paid	$50 x 90 units = 4,500	$50 x 100 units = 5,000	$50 x 120 units = 6,000	15,500
Delivery	$20 x 90 units = 1,800	$20 x 100 units = 2,000	$20 x 120 units = 2,400	6,200
Total				152,550