Boston Corporation has just received its marketing expense report for March of the current year, which follows.
Question:
Boston Corporation has just received its marketing expense report for March of the current year, which follows.
Item Amount
Sales Commissions ............................................................... $135,000
Sales Staff Salaries.................................................................... 32,000
Telephone and Mailing............................................................. 16,200
Building Lease Payment .......................................................... 20,000
Heat, Light, and Water ............................................................... 4,100
Packaging and Delivery............................................................ 27,400
Depreciation.............................................................................. 12,500
Marketing Consultants.............................................................. 19,700
You have been asked to develop budgeted costs for March of next year. Starting with the results for March of this year shown above, you learn the following expectations for next year:
_ Sales volume should increase by 5 percent.
_ Sales prices should increase by 10 percent.
_ Commissions are based on a percentage of sales revenue.
_ Sales staff salaries will increase 4 percent next year regardless of sales volume.
_ Telephone and mailing expenses are scheduled to increase by 8 percent even with no change in sales volume. However, these costs are variable with the number of units sold.
_ Packaging and delivery costs are not affected by inflation but are variable with the number of units sold.
_ Building rent is based on a five-year lease that expires in three years.
_ Heat, light, and water are scheduled to increase by 12 percent regardless of sales volume.
_ Depreciation includes furniture and fixtures used by the sales staff. There will be no change in depreciation expense.
_ Marketing consultant expenses were for a special advertising campaign that runs from time to time. During the coming year, the costs are expected to average $35,000 per month.
Prepare a budget for marketing expenses for a typical month in the comingyear.
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Managerial Accounting An Introduction to Concepts Methods and Uses
ISBN: 978-0324639766
10th Edition
Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil