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9. Selling and administrative expenses are known to be a mixed cost; however, there is a lot of uncertainty about the portion that is
9. Selling and administrative expenses are known to be a mixed cost; however, there is a lot of uncertainty about the portion that is fixed. Previous year's experience has provided the following information: Lowest level of sales: Highest level of sales: 375,000 units Total Operating Expenses: $596,100 750,000 units Total Operating Expenses: $858,600 It is estimated that selling and administrative expenses for the budget year will be about 10% greater that the previous average. These costs are paid in the month in which they occur, with the exception of the only non-cash item: a monthly amortization of office equipment in the amount of $800. Not included in the above expenses is bad debt expense or warehouse rental. 10. Sales are on a cash and credit basis, with 75% collected during the month of the sale, 15% the following month, and 9.5% the month thereafter. of 1% of sales are considered uncollectible (bad debt expense).
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