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Knowledge Check 01 Which of the following is deducted from the total selling and administrative expense budget to determine the cash disbursements for selling and administrative expense budget? Advertising expense Depreciation expense Selling commissions Utilities expense Knowledge Check 02 A company determines that the number of units sold is the cost driver for its variable selling and administrative expense budget. The product of its variable selling and administrative rate and budgeted unit sales will be ________. budgeted sales revenue total budgeted cash disbursements for selling and administrative expenses total budgeted fixed selling and administrative expenses total budgeted variable selling and administrative expenses

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Answer:

Knowledge Check 01 Which of the following is deducted from the total selling and administrative expense budget to determine the cash disbursements for selling and administrative expense budget?

  • Depreciation expense

Depreciation expense is a non cash charge since there is no cash outflow associated to it. The same applies for amortization expense, asset impairments, stock based compensation and asset depletion (similar to depreciation but used by extracting companies like mines and oil companies).

Knowledge Check 02 A company determines that the number of units sold is the cost driver for its variable selling and administrative expense budget. The product of its variable selling and administrative rate and budgeted unit sales will be ________.

  • total budgeted variable selling and administrative expenses

Since we are dealing with budgets, any calculation is also a budget or forecast. We are calculating here the total budgeted variable selling and administrative expense since we are multiplying the predetermined variable S&A per unit x budgeted units.

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