A company’s controller is adjusting next year’s budget to reflect the impact of an expected 3 percent inflation rate. Listed below are selected items from next year’s budget before the adjustment.
Total salaries expense $360,000
Materials costs 400,000
Depreciation expense 48,000
Interest expense on 10-year fixed-rate notes 27,350
After adjusting for the 3 percent inflation rate, what is the company’s total budget for the selected items before taxes for next year?
a. $858,150
b. $860,412
c. $810,971
d. $858,971