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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

Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter10: Cost Analysis For Management Decision Making
Section: Chapter Questions
Problem 6E: The fixed overhead budgeted for Ranier Industries at an expected capacity of 500,000 units is...
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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
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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