Dunweiler Inc, is developing a pro forma income statement for the comi

Dunweiler Inc, is developing a pro forma income statement for the coming year. The chief financial officer estimates that sales will be $150,000,000.

If selling, general, and administrative expenses (SGA) are historically 18% of sales, what are the expected SGA expenses (in dollars)?
A) $18,000,000
B) $27,000,000
C) $30,000,000
D) $41,000,000

ANSWER

B
Explanation: B) SGA =0.18 * (Sales) = 0.18 * $150,000,000 = $27,000,000.