Petrini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:
- The budgeted selling price per unit is $110. Budgeted unit sales for January, February, March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on credit.
- Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month.
- The ending finished goods inventory equals 30% of the following month's sales.
- The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $4.00 per pound.
- Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month.
- The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct labor-hours.
- Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.
- The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $70,000.
The estimated selling and administrative expense for February is closest to:
▸ $70,000
▸ $58,680
▸ $88,020
▸ $18,020
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