What this quiz covers
This quiz focuses on Selling And Administrative Budgets, giving you a quick way to practice the rules, question types, and explanations that matter most for Cost Accounting.
Cost Accounting Quiz: Selling And Administrative Budgets
4 questions · exam conditions
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Selling And Administrative BudgetsQuestion 1 of 4
Alpine Corporation allocates corporate administrative costs to operating divisions based on relative sales revenues. The total corporate administrative budget for next year is $480,000, consisting of $360,000 in fixed costs and $120,000 in variable costs. Division A is budgeted to have sales of $2,400,000, while total company sales are budgeted at $8,000,000. If Division A's direct selling and administrative costs are budgeted at $156,000, what is Division A's total selling and administrative expense budget?
A$300,000
B$192,000
C$200,000
D$288,000
Cost Accounting Quiz
Cost Accounting Quiz: Selling And Administrative Budgets
Practice Selling And Administrative Budgets in Cost Accounting with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.
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Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.
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Question 1
Alpine Corporation allocates corporate administrative costs to operating divisions based on relative sales revenues. The total corporate administrative budget for next year is $480,000, consisting of $360,000 in fixed costs and $120,000 in variable costs. Division A is budgeted to have sales of $2,400,000, while total company sales are budgeted at $8,000,000. If Division A's direct selling and administrative costs are budgeted at $156,000, what is Division A's total selling and administrative expense budget?
- $300,000 (correct answer)
- $192,000
- $200,000
- $288,000
Explanation: Division A's allocation percentage: $2,400,000 ÷ $8,000,000 = 30%. Allocated corporate administrative costs: 30% × $480,000 = $144,000. Division A's total selling and administrative budget: Direct costs $156,000 + Allocated costs $144,000 = 300,000.ChoiceB(192,000) only includes direct costs plus a portion of allocation. Choice C (200,000)appearstouseanincorrectallocationbase.ChoiceD(288,000) might double-count some components or use wrong percentages.
Question 2
Pinnacle Corporation is preparing its selling and administrative budget for the first quarter and needs to consider the timing differences between expense recognition and cash payments. Monthly fixed costs total $35,000, with $8,000 representing depreciation. Variable costs are $1.80 per unit sold. The company pays 60% of its variable costs in the month incurred and 40% in the following month. January sales are budgeted at 22,000 units, February at 26,000 units, and March at 24,000 units. Additionally, $4,800 in variable costs from December are still unpaid. What is the total cash outflow for selling and administrative expenses in February?
- $70,920 (correct answer)
- $74,120
- $71,280
- $66,600
Explanation: February cash outflows include: Fixed costs (excluding depreciation): $35,000 - $8,000 = 27,000.FebruaryvariablecostspaidinFebruary:601.80 × 26,000) = 60% × $46,800 = 28,080.JanuaryvariablecostspaidinFebruary:401.80 × 22,000) = 40% × $39,600 = $15,840. Total February cash outflow: $27,000 + $28,080 + $15,840 = $70,920. Choice B includes depreciation incorrectly. Choice C might include some of the December unpaid amount. Choice D omits the January carryover payment.
Question 3
Riverfront Company's selling and administrative budget includes both cash and non-cash expenses. For the upcoming quarter, budgeted expenses are: sales commissions $45,000 (paid in the following quarter), office salaries $78,000 (paid monthly), depreciation on equipment $12,000, advertising $18,000 (paid in advance last quarter), and utilities $9,000 (paid in the month incurred). The company also accrues vacation pay expense of $6,000 for the quarter, to be paid in the following year. What is the cash outflow for selling and administrative expenses during the quarter?
- $87,000 (correct answer)
- $105,000
- $99,000
- $168,000
Explanation: Cash outflows during the quarter include only items paid during this period: Office salaries $78,000 (paid monthly during quarter) + Utilities $9,000 (paid in month incurred) = 87,000.Salescommissionsarepaidnextquarter(nocashoutflowthisquarter).Advertisingwasprepaidlastquarter(nocashoutflowthisquarter).Depreciationisnon−cash.Vacationpayisaccruedbutnotpaiduntilnextyear.ChoiceB(105,000) incorrectly includes some non-cash items. Choice C (99,000)mightincorrectlyincludepartofthevacationaccrual.ChoiceD(168,000) includes the full expense budget rather than just cash outflows.
Question 4
Meridian Company's selling and administrative budget includes depreciation on office equipment of $8,000 per quarter, sales salaries of $45,000 per quarter, and administrative salaries of $32,000 per quarter. Variable selling expenses are 4% of sales revenue, and insurance expense of $6,000 is paid annually each January. If budgeted sales revenue for Q2 is $425,000, what amount should be included in the Q2 selling and administrative expense budget for external reporting purposes?
- $101,000
- $103,500 (correct answer)
- $109,500
- $102,500
Explanation: For external reporting (accrual basis), include: Sales salaries $45,000, administrative salaries $32,000, depreciation $8,000, variable selling expenses 4% × $425,000 = $17,000, and insurance expense allocation $6,000 ÷ 4 quarters = $1,500. Total = $45,000 + $32,000 + $8,000 + $17,000 + $1,500 = 103,500.ChoiceA(101,000) omits the insurance allocation. Choice C (109,500)incorrectlyincludesthefullannualinsurance.ChoiceD(102,500) likely has a calculation error in the variable component.