imothy Donaghy has developed a unique formula for growing hair. His proprietary lotion, used regularly for 45 days, will grow hair in bald spots (with varying degrees of success). Timothy calls his lotion Hair-Again and is selling it via the telephone and Internet. His major form of marketing is through 15-minute infomercials and Internet advertising. Timothy sells each 16-ounce bottle of Hair-Again for $15 and pays a commission of 3 percent of sales to telephone operators who field the 1-800 phone calls from potential customers. Fixed marketing expenses for each quarter of the coming year include: Internet banner ads $7,600 Telephone operator time 5,000 Travel 3,000 In addition, early next year Timothy intends to film and show infomercials on television. He expects the cost to be $12,000 in quarters 1 and 2, and that the cost will rise to $25,000 in each of quarters 3 and 4. Timothy expects the following unit sales of Hair-Again: Quarter 1 5,000 Quarter 2 15,000 Quarter 3 40,000 Quarter 4 35,000 Required: Question Content Area 1. Construct a marketing expense budget for Hair-Again for the coming year. Show total amounts by quarter and in total for the year. If required, round your answers to two decimal places. Hair-AgainMarketing Expense BudgetFor the Year Ended December 31 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total - Select - - Select - - Select - - Select - - Select - $- Select - $- Select - $- Select - $- Select - $- Select - Total variable expense $fill in the blank f49f7ff7301606a_13 $fill in the blank f49f7ff7301606a_14 $fill in the blank f49f7ff7301606a_15 $fill in the blank f49f7ff7301606a_16 $fill in the blank f49f7ff7301606a_17 Fixed marketing expense: $- Select - $- Select - $- Select - $- Select - $- Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select - Total fixed expense $fill in the blank f49f7ff7301606a_42 $fill in the blank f49f7ff7301606a_43 $fill in the blank f49f7ff7301606a_44 $fill in the blank f49f7ff7301606a_45 $fill in the blank f49f7ff7301606a_46 Total marketing expense $fill in the blank f49f7ff7301606a_47 $fill in the blank f49f7ff7301606a_48 $fill in the blank f49f7ff7301606a_49 $fill in the blank f49f7ff7301606a_50 $fill in the blank f49f7ff7301606a_51 Question Content Area 2. What if the cost of internet ads rises to $16,000 in Quarters 2 through 4? How would that affect variable marketing expense? Fixed marketing expense? Total marketing expense? If no effect
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Timothy Donaghy has developed a unique formula for growing hair. His proprietary lotion, used regularly for 45 days, will grow hair in bald spots (with varying degrees of success). Timothy calls his lotion Hair-Again and is selling it via the telephone and Internet. His major form of marketing is through 15-minute infomercials and Internet advertising. Timothy sells each 16-ounce bottle of Hair-Again for $15 and pays a commission of 3 percent of sales to telephone operators who field the 1-800 phone calls from potential customers. Fixed marketing expenses for each quarter of the coming year include:
| Internet banner ads | $7,600 |
| Telephone operator time | 5,000 |
| Travel | 3,000 |
In addition, early next year Timothy intends to film and show infomercials on television. He expects the cost to be $12,000 in quarters 1 and 2, and that the cost will rise to $25,000 in each of quarters 3 and 4. Timothy expects the following unit sales of Hair-Again:
| Quarter 1 | 5,000 |
| Quarter 2 | 15,000 |
| Quarter 3 | 40,000 |
| Quarter 4 | 35,000 |
Required:
Question Content Area
1. Construct a marketing expense budget for Hair-Again for the coming year. Show total amounts by quarter and in total for the year. If required, round your answers to two decimal places.
| Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | Total | |
|---|---|---|---|---|---|
|
|
- Select - | - Select - | - Select - | - Select - | - Select - |
|
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$- Select - | $- Select - | $- Select - | $- Select - | $- Select - |
| Total variable expense | $fill in the blank f49f7ff7301606a_13 | $fill in the blank f49f7ff7301606a_14 | $fill in the blank f49f7ff7301606a_15 | $fill in the blank f49f7ff7301606a_16 | $fill in the blank f49f7ff7301606a_17 |
| Fixed marketing expense: | |||||
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|
$- Select - | $- Select - | $- Select - | $- Select - | $- Select - |
|
|
- Select - | - Select - | - Select - | - Select - | - Select - |
|
|
- Select - | - Select - | - Select - | - Select - | - Select - |
|
|
- Select - | - Select - | - Select - | - Select - | - Select - |
| Total fixed expense | $fill in the blank f49f7ff7301606a_42 | $fill in the blank f49f7ff7301606a_43 | $fill in the blank f49f7ff7301606a_44 | $fill in the blank f49f7ff7301606a_45 | $fill in the blank f49f7ff7301606a_46 |
| Total marketing expense | $fill in the blank f49f7ff7301606a_47 | $fill in the blank f49f7ff7301606a_48 | $fill in the blank f49f7ff7301606a_49 | $fill in the blank f49f7ff7301606a_50 | $fill in the blank f49f7ff7301606a_51 |
Question Content Area
2. What if the cost of internet ads rises to $16,000 in Quarters 2 through 4? How would that affect variable marketing expense? Fixed marketing expense? Total marketing expense? If no effect, enter "0" and select "no impact".
| Variable marketing expense | $fill in the blank 077be5050fca01a_1 |
|
| Fixed marketing expense | $fill in the blank 077be5050fca01a_3 |
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| Total marketing expense | $fill in the blank 077be5050fca01a_5 |
|
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