Bee Beautiful (BB) is a small producer of honey-related beauty products, selling to local gift shops and boutiques. It’s early in the year and BB’s marketing analyst is looking ahead. Traditionally, BB has experienced most of its sales in the third quarter as it sells to its retailers in anticipation of the holiday season. (Holiday-sensitive retailers do most of their buying in the third quarter so they have appropriate stock for the holiday season.) Given current difficulties in the retail market, the analyst has suggested increasing BB’s marketing budget for the second quarter only (budget will return to first quarter levels in the third quarter). The analyst anticipates this increase will result in an increase in BB’s sales to its retailers in the third quarter (this type of lag between marketing expenditures and sales results is typical in BB’s market). The analyst is forecasting that an 18% increase in the marketing budget should yield a 3% increase in sales. BB’s second quarter income statement includes the following information:

Bee Beautiful First Quarter Profit and Loss Statement
Sales	$1,673,200
Cost of Goods Sold	$1,070,848
Gross Profit Margin	$602,352
Expenses
Marketing expenses	$150,588
Other General and Administrative Expenses	$384,412
Total Expenses	$535,000
Profit (Loss)	$67,352

Develop pro forma profit and loss statements for Bee Beautiful for the second and third quarters reflecting the impact of this marketing campaign. Be sure to include all areas of the profit and loss statement this campaign will impact.

Costs of good sold is mixed

Answer rating: 100% (QA)

Profit and Loss Statement for the First Quarter of Bee Beautiful P... View the full answer