Prepare an activity$-$based budget for next year by activity. Use the expected level of sales activity. If required, round answers to the nearest dollar.

Olympus, Inc.

Activity$-$Based Budget

For Next Year

Research:

Jobbers:

Basic ads:

Ultima ads:

Salaries

Advertising

Office management:

Salaries

Depreciation

Office Supplies

Total

$Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are $14,950$ for the Sleepeze, $12,670$ for the Plushette, and $5,260$ for the Ultima. Gene Dixon, vice president of sales, has provided the following information:

Salaries for his office $($including himself at $$64,400,$ a marketing research assistant at $$41,050,$ and an administrative assistant at $$24,700)$ are budgeted for $$130,150$ next year.

Depreciation on the offices and equipment is $$17,900$ per year.

Office supplies and other expenses total $$18,050$ per year.

Advertising has been steady at $$21,050$ per year. However, the Ultima is a new product and will require extensive advertising to educate consumers on the unique features of this high$-$end mattress. Gene believes the company should spend $10$ percent of first$-$year Ultima sales for a print and television campaign.

Commissions on the Sleepeze and Plushette lines are $6$ percent of sales. These commissions are paid to independent jobbers who sell the mattresses to retail stores.

Last year, shipping for the Sleepeze and Plushette lines averaged $$55$ per unit sold. Gene expects the Ultima line to ship for $$80$ per unit sold since this model features a larger mattress.

Suppose that Gene is considering three sales scenarios as follows:

Pessimistic Expected Optimistic

Price Quantity Price Quantity Price Quantity

Sleepeze $$18812,000$ $$20614,950$ $$20617,870$

Plushette $2909,90034412,67035314,360$

Ultima $9301,8301,0405,2601,2205,260$

Suppose Gene determines that next year's Sales Division activities include the following:

Research$$researching current and future conditions in the industry

Shipping$$arranging for shipping of mattresses and handling calls from purchasing agents at retail stores to trace shipments and correct errors

Jobbers$$coordinating the efforts of the independent jobbers who sell the mattresses

Basic ads$$placing print and television ads for the Sleepeze and Plushette lines

Ultima ads$$choosing and working with the advertising agency on the Ultima account

Office management$$operating the Sales Division office

The percentage of time spent by each employee of the Sales Division on each of the above activities is given in the following table:

Gene Research

Assistant Administrative

Assistant

Research $-70\%-$

Shipping $35\%-25\%$

Jobbers $101515$

Basic ads $-1540$

Ultima ads $30-5$

Office management $25-15$

Additional information is as follows:

Depreciation on the office equipment belongs to the office management activity.

Of the $$18,050$ for office supplies and other expenses, $$4,700$ can be assigned to telephone costs which can be split evenly between the shipping and jobbers' activities. An additional $$2,400$ per year is attributable to Internet connections and fees, and the bulk of these costs $(70$ percent$)$ are assignable to research. The remainder is a cost of office management. All other office supplies and costs are assigned to the office management activity.

Required:

Question Content Area

$1.$ Prepare an activity$-$based budget for next year by activity. Use the expected level of sales activity. If required, round answers to the nearest dollar.

Olympus, Inc.

Activity$-$Based Budget

For Next Year

Research:

Salaries

$Salaries

Internet connections

Internet connections

$Internet connections

Shipping:

Salaries

$Salaries

Telephone

Telephone

Ship Sleepeze

Ship Sleepeze

Ship Plushette

Ship Plushette

Ship Ultima

Ship Ultima

Ship Ultima

Jobbers:

Salaries

$Salaries

Telephone

Telephone

Commissions

Commissions

Commissions

Basic ads:

Salaries

$Salaries

Advertising

Advertising

Advertising

Ultima ads:

Salaries

$Salaries

Advertising

Advertising

Advertising

Office management:

Salaries

$Salaries

Depreciation

Depreciation

Office Supplies

Office Supplies

Office Supplies

Total $fill in the blank d$78$ce$5$f$9$dfbdfa$8\_41$