Classification of costs, merchandising sector. Band Box Entertainment (BBE) operates a large store in Atlanta, Georgia. The store has both a movie (DVD) section and a music (CD) section. BBE reports revenues for the movie section separately from the music section. Classify each cost item (A–H) as follows: Direct or indirect (D or I) costs of the total number of DVDs sold. Variable or fixed (V or F) costs of how the total costs of the movie section change as the total number of DVDs sold changes. (If in doubt, select on the basis of whether the total costs will change substantially if there is a large change in the total number of DVDs sold.) You will have two answers (D or I; V or F) for each of the following items: Cost Item D or I V or F Annual retainer paid to a video distributor Cost of store manager’s salary Costs of DVDs purchased for sale to customers Subscription to DVD Trends magazine Leasing of computer software used for financial budgeting at the BBE store Cost of popcorn provided free to all customers of the BBE store Cost of cleaning the store every night after closing Freight-in costs of DVDs purchased by BBE
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.
Classification of costs, merchandising sector. Band Box Entertainment (BBE) operates a large store in Atlanta, Georgia. The store has both a movie (DVD) section and a music (CD) section. BBE reports revenues for the movie section separately from the music section. Classify each cost item (A–H) as follows:
- Direct or indirect (D or I) costs of the total number of DVDs sold.
- Variable or fixed (V or F) costs of how the total costs of the movie section change as the total number of DVDs sold changes. (If in doubt, select on the basis of whether the total costs will change substantially if there is a large change in the total number of DVDs sold.)
You will have two answers (D or I; V or F) for each of the following items: Cost Item D or I V or F
- Annual retainer paid to a video distributor
- Cost of store manager’s salary
- Costs of DVDs purchased for sale to customers
- Subscription to DVD Trends magazine
- Leasing of computer software used for financial budgeting at the BBE store
- Cost of popcorn provided free to all customers of the BBE store
- Cost of cleaning the store every night after closing
- Freight-in costs of DVDs purchased by BBE
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