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15 March, 12:03

Cooke Company incurs $4 per unit of variable selling and administrative expense and $50,000 per month in fixed selling and administrative expense. Of the fixed expense, $12,000 relates to depreciation each month. Selling and administrative expense is paid in the month incurred. During February 2011, Cooke produced 50,000 units and sold 48,000 units. What amount would Cooke include for selling and administrative expense on its February income statement?

a. $250,000

b. $238,000

c. $242,000

d. $230,000

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Answers (1)
  1. 15 March, 15:22
    0
    Selling and administrative expense = $242000

    so correct option is c. $242,000

    Explanation:

    given data

    variable selling and administrative expense = $4 per unit

    fixed selling and administrative expense = $50,000 per month

    depreciation = $12,000

    Cooke produced = 50,000 units

    sold = 48,000 units

    to find out

    What amount would Cooke include for selling and administrative expense

    solution

    we get here variable selling and administrative expense will be here as

    Variable selling and administrative expense = variable selling and administrative expense * sold ... 1

    put here value we get

    Variable selling and administrative expense = $48000 * $4

    Variable selling and administrative expense = $192000

    and Fixed selling and administrative expense is = 50000

    Selling and administrative expense income statement is

    Selling and administrative expense = $192000 + $50000

    Selling and administrative expense = $242000

    so correct option is c. $242,000
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