Print Item The Operating Budgets: Marketing and Administrative Expense Budgets The marketing expense budget can be prepared in much the same way as the overhead budget. That is, variable expenses and fixed expenses are budgeted and then totaled. Suppose that a company has variable marketing expense consisting of a sales commission equal to 5% of sales revenue. Sales revenue for the first three months of the quarter equals $560,000, $580,000, and $600,000. Fixed marketing expense consists of the following monthly costs: depreciation $3,500, salaries $12,000, and advertising $5,000. Prepare a marketing expense budget for the first quarter, by month and in total. Budgeted sales revenue x Sales commission rate Budgeted variable marketing expense Fixed marketing expense: Depreciation Salaries January 560,000 ✓ $ 5 X 28,000 ✓ 3,500 ✓ 12,000 ✓ 5,000 ✓ 20,500 ✔ 48,500 ✔ February 580,000 ✓ 5.2 X 29,000 3,500 12,000 5,000 ✓ March 20,500 ✔ 49,500 ✔ 600,000 ✓ 5.3 X 30,000 ✓ 3,500 ✔ 12,000 V 5,000 ✓ 20,500 ✔ 50,500 ✔ $ Total 1,740,000 5.4 X 87,000 10,500 36,000 15,000 Advertising Budgeted fixed marketing expense Total budgeted marketing expense The administrative budget is typically a listing of line item administrative costs and the expected amounts. Administrative costs do not vary ✓ 61,500 148,500
Print Item The Operating Budgets: Marketing and Administrative Expense Budgets The marketing expense budget can be prepared in much the same way as the overhead budget. That is, variable expenses and fixed expenses are budgeted and then totaled. Suppose that a company has variable marketing expense consisting of a sales commission equal to 5% of sales revenue. Sales revenue for the first three months of the quarter equals $560,000, $580,000, and $600,000. Fixed marketing expense consists of the following monthly costs: depreciation $3,500, salaries $12,000, and advertising $5,000. Prepare a marketing expense budget for the first quarter, by month and in total. Budgeted sales revenue x Sales commission rate Budgeted variable marketing expense Fixed marketing expense: Depreciation Salaries January 560,000 ✓ $ 5 X 28,000 ✓ 3,500 ✓ 12,000 ✓ 5,000 ✓ 20,500 ✔ 48,500 ✔ February 580,000 ✓ 5.2 X 29,000 3,500 12,000 5,000 ✓ March 20,500 ✔ 49,500 ✔ 600,000 ✓ 5.3 X 30,000 ✓ 3,500 ✔ 12,000 V 5,000 ✓ 20,500 ✔ 50,500 ✔ $ Total 1,740,000 5.4 X 87,000 10,500 36,000 15,000 Advertising Budgeted fixed marketing expense Total budgeted marketing expense The administrative budget is typically a listing of line item administrative costs and the expected amounts. Administrative costs do not vary ✓ 61,500 148,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Transcribed Image Text:Print Item
The Operating Budgets: Marketing and Administrative Expense Budgets
The marketing expense budget can be prepared in much the same way as the overhead budget. That is, variable expenses and fixed expenses
are budgeted and then totaled. Suppose that a company has variable marketing expense consisting of a sales commission equal to 5% of
sales revenue. Sales revenue for the first three months of the quarter equals $560,000, $580,000, and $600,000. Fixed marketing expense
consists of the following monthly costs: depreciation $3,500, salaries $12,000, and advertising $5,000. Prepare a marketing expense budget
for the first quarter, by month and in total.
Budgeted sales revenue
x Sales commission rate
Budgeted variable marketing expense $
Fixed marketing expense:
Depreciation
Salaries
January
560,000
5 X
28,000
3,500
12,000
5,000
February
580,000
20,500
48,500 ✔
5.2 X
29,000
3,500
12,000
5,000
20,500
49,500
$
$
March
600,000
5.3 X
30,000
3,500
12,000
5,000
20,500
50,500
Total
1,740,000
5.4 X
87,000
10,500
36,000
15,000
Advertising
Budgeted fixed marketing expen
Total budgeted marketing expense
The administrative budget is typically a listing of line item administrative costs and the expected amounts. Administrative costs do not vary
61,500
148,500
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