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 Telephone operator time $7,600 Travel 5,000 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 $24,000 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 41 35,000 Required: 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.
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 Telephone operator time $7,600 Travel 5,000 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 $24,000 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 41 35,000 Required: 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
Telephone operator time
$7,600
Travel
5,000
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 $24,000 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 41
35,000
Required:
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.
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