Simpson Company makes and sells a single product. Budgeted sales for April are $1,150,000. Gross margin is budgeted at 30% of sales. If the net income for April is budgeted at $155,000, budgeted selling and administrative expenses must be:

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amcool amcool · Answer 1 · 2021-06-24T02:42:44+02:00

Answer:

Budgeted selling and administrative expenses must be $190,000.

Explanation:

Budgeted selling and administrative expenses can be calculated as follows:

Budgeted gross margin = Budgeted sales * Percentage of budgeted sales that is budgeted gross margin = $1,150,000 * 30% = $345,000

Budgeted net income = Budgeted gross margin - Budgeted selling and administrative expenses …………. (1)

Substituting the relevant values into equation (1) and solve for budgeted selling and administrative expenses, we have:

$155,000 = $345,000 - Budgeted selling and administrative expenses

Budgeted selling and administrative expenses = $345,000 - $155,000 = $190,000

Therefore, budgeted selling and administrative expenses must be $190,000.