Gabon, prepared the following budget for 2008 Sales Department Budgeted Costs, 2
ID: 2435221 • Letter: G
Question
Gabon, prepared the following budget for 2008Sales Department
Budgeted Costs, 2008
(Assuming Sales of $12,000.000)
Salaries (fixed) $500,000
Commissions (variable) $180,000
Advertising (fixed) $100,000
Charge for office space (fixed) $ 2,000
Office supplies & forms (variable) $ 2,400
Total $784,400
After he submitted his budget, the president reviewed it and recommended that advertising be increased to $120,000. She wanted to assume a sales level of $13,000,000. This level of sales is to be achieved without adding to the sales force
The sales group occupies approximately 250 square feet of office space out of total administrative office space of 20,000 square feet. The $2,000 space charge in the budget is the share (allocated based on relative square feet) of the company’s total cost of rent, utilities and janitorial costs for the administrative office building.
Required: Prepare a revised budget consistent with the president’s recommendation.
Explanation / Answer
Revised Budget Assuming Sales $13,000.000 Salaries (fixed) $500,000 Commissions (variable) $195,000 Advertising $120,000 Charge for office space $ 2,000 Office supplies & forms $ 2,600 Total $819,600
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