Sales Forecast and Flexible Budget Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,120 for the Sleepeze, 11,740 for the Plushette, and 4,880 for the Ultima. Gene Dixon, vice president of sales, has provided the following information: Salaries for his office (including himself at $66,700, a marketing research assistant at $41,750, and an administrative assistant at $22,250) are budgeted for $130,700 next year. Depreciation on the offices and equipment is $22,400 per year. Office supplies and other expenses total $21,350 per year. Advertising has been steady at $20,350 per year. However, the Ultima is a new product and will require extensive advertising to educate consumers on the unique features of this high-end mattress. Gene believes the company should spend 15 percent of first-year Ultima sales for a print and television campaign. Commissions on the Sleepeze and Plushette lines are 5 percent of sales. These commissions are paid to independent jobbers who sell the mattresses to retail stores. Last year, shipping for the Sleepeze and Plushette lines averaged $55 per unit sold. Gene expects the Ultima line to ship for $70 per unit sold since this model features a larger mattress. Required: 1. Suppose that Gene is considering three sales scenarios as follows: Pessimistic Expected Optimistic Price Quantity Price Quantity Price Quantity Sleepeze $188 12,740 $203 15,120 $203 17,680 Plushette 310 10,450 366 11,740 375 14,220 Ultima 850 2,220 980 4,880 1,200 4,880 Prepare a revenue budget for the Sales Division for the coming year for each scenario. Olympus, Inc. Revenue Budget For the Coming Year Pessimistic Expected Optimistic Sleepeze $fill in the blank 516680f50fcd03a_1 $fill in the blank 516680f50fcd03a_2 $fill in the blank 516680f50fcd03a_3 Plushette fill in the blank 516680f50fcd03a_4 fill in the blank 516680f50fcd03a_5 fill in the blank 516680f50fcd03a_6 Ultima fill in the blank 516680f50fcd03a_7 fill in the blank 516680f50fcd03a_8 fill in the blank 516680f50fcd03a_9 Total sales $fill in the blank 516680f50fcd03a_10 $fill in the blank 516680f50fcd03a_11 $fill in the blank 516680f50fcd03a_12 2. Prepare a flexible expense budget for the Sales Division for the three scenarios above. If required, round answers to the nearest dollar. Olympus, Inc. Flexible Expense Budget For the Coming Year Pessimistic Expected Optimistic Salaries $fill in the blank 5da9edfd6076048_1 $fill in the blank 5da9edfd6076048_2 $fill in the blank 5da9edfd6076048_3 Depreciation fill in the blank 5da9edfd6076048_4 fill in the blank 5da9edfd6076048_5 fill in the blank 5da9edfd6076048_6 Office supplies and other fill in the blank 5da9edfd6076048_7 fill in the blank 5da9edfd6076048_8 fill in the blank 5da9edfd6076048_9 Advertising: Sleepeze and Plushette fill in the blank 5da9edfd6076048_10 fill in the blank 5da9edfd6076048_11 fill in the blank 5da9edfd6076048_12 Ultima fill in the blank 5da9edfd6076048_13 fill in the blank 5da9edfd6076048_14 fill in the blank 5da9edfd6076048_15 Commissions fill in the blank 5da9edfd6076048_16 fill in the blank 5da9edfd6076048_17 fill in the blank 5da9edfd6076048_18 Shipping: Sleepeze fill in the blank 5da9edfd6076048_19 fill in the blank 5da9edfd6076048_20 fill in the blank 5da9edfd6076048_21 Plushette fill in the blank 5da9edfd6076048_22 fill in the blank 5da9edfd6076048_23 fill in the blank 5da9edfd6076048_24 Ultima fill in the blank 5da9edfd6076048_25 fill in the blank 5da9edfd6076048_26 fill in the blank 5da9edfd6076048_27 Total $fill in the blank 5da9edfd6076048_28 $fill in the blank 5da9edfd6076048_29 $fill in the blank 5da9edfd6076048_30

Sales Forecast and Flexible Budget Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,120 for the Sleepeze, 11,740 for the Plushette, and 4,880 for the Ultima. Gene Dixon, vice president of sales, has provided the following information: Salaries for his office (including himself at $66,700, a marketing research assistant at $41,750, and an administrative assistant at $22,250) are budgeted for $130,700 next year. Depreciation on the offices and equipment is $22,400 per year. Office supplies and other expenses total $21,350 per year. Advertising has been steady at $20,350 per year. However, the Ultima is a new product and will require extensive advertising to educate consumers on the unique features of this high-end mattress. Gene believes the company should spend 15 percent of first-year Ultima sales for a print and television campaign. Commissions on the Sleepeze and Plushette lines are 5 percent of sales. These commissions are paid to independent jobbers who sell the mattresses to retail stores. Last year, shipping for the Sleepeze and Plushette lines averaged $55 per unit sold. Gene expects the Ultima line to ship for $70 per unit sold since this model features a larger mattress. Required: 1. Suppose that Gene is considering three sales scenarios as follows: Pessimistic Expected Optimistic Price Quantity Price Quantity Price Quantity Sleepeze $188 12,740 $203 15,120 $203 17,680 Plushette 310 10,450 366 11,740 375 14,220 Ultima 850 2,220 980 4,880 1,200 4,880 Prepare a revenue budget for the Sales Division for the coming year for each scenario. Olympus, Inc. Revenue Budget For the Coming Year Pessimistic Expected Optimistic Sleepeze $fill in the blank 516680f50fcd03a_1 $fill in the blank 516680f50fcd03a_2 $fill in the blank 516680f50fcd03a_3 Plushette fill in the blank 516680f50fcd03a_4 fill in the blank 516680f50fcd03a_5 fill in the blank 516680f50fcd03a_6 Ultima fill in the blank 516680f50fcd03a_7 fill in the blank 516680f50fcd03a_8 fill in the blank 516680f50fcd03a_9 Total sales $fill in the blank 516680f50fcd03a_10 $fill in the blank 516680f50fcd03a_11 $fill in the blank 516680f50fcd03a_12 2. Prepare a flexible expense budget for the Sales Division for the three scenarios above. If required, round answers to the nearest dollar. Olympus, Inc. Flexible Expense Budget For the Coming Year Pessimistic Expected Optimistic Salaries $fill in the blank 5da9edfd6076048_1 $fill in the blank 5da9edfd6076048_2 $fill in the blank 5da9edfd6076048_3 Depreciation fill in the blank 5da9edfd6076048_4 fill in the blank 5da9edfd6076048_5 fill in the blank 5da9edfd6076048_6 Office supplies and other fill in the blank 5da9edfd6076048_7 fill in the blank 5da9edfd6076048_8 fill in the blank 5da9edfd6076048_9 Advertising: Sleepeze and Plushette fill in the blank 5da9edfd6076048_10 fill in the blank 5da9edfd6076048_11 fill in the blank 5da9edfd6076048_12 Ultima fill in the blank 5da9edfd6076048_13 fill in the blank 5da9edfd6076048_14 fill in the blank 5da9edfd6076048_15 Commissions fill in the blank 5da9edfd6076048_16 fill in the blank 5da9edfd6076048_17 fill in the blank 5da9edfd6076048_18 Shipping: Sleepeze fill in the blank 5da9edfd6076048_19 fill in the blank 5da9edfd6076048_20 fill in the blank 5da9edfd6076048_21 Plushette fill in the blank 5da9edfd6076048_22 fill in the blank 5da9edfd6076048_23 fill in the blank 5da9edfd6076048_24 Ultima fill in the blank 5da9edfd6076048_25 fill in the blank 5da9edfd6076048_26 fill in the blank 5da9edfd6076048_27 Total $fill in the blank 5da9edfd6076048_28 $fill in the blank 5da9edfd6076048_29 $fill in the blank 5da9edfd6076048_30

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

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Sales Forecast and Flexible Budget

Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,120 for the Sleepeze, 11,740 for the Plushette, and 4,880 for the Ultima. Gene Dixon, vice president of sales, has provided the following information:

Salaries for his office (including himself at $66,700, a marketing research assistant at $41,750, and an administrative assistant at $22,250) are budgeted for $130,700 next year.
Depreciation on the offices and equipment is $22,400 per year.
Office supplies and other expenses total $21,350 per year.
Advertising has been steady at $20,350 per year. However, the Ultima is a new product and will require extensive advertising to educate consumers on the unique features of this high-end mattress. Gene believes the company should spend 15 percent of first-year Ultima sales for a print and television campaign.
Commissions on the Sleepeze and Plushette lines are 5 percent of sales. These commissions are paid to independent jobbers who sell the mattresses to retail stores.
Last year, shipping for the Sleepeze and Plushette lines averaged $55 per unit sold. Gene expects the Ultima line to ship for $70 per unit sold since this model features a larger mattress.

Required:

1. Suppose that Gene is considering three sales scenarios as follows:

	Pessimistic		Expected		Optimistic
	Price	Quantity		Price	Quantity	Price	Quantity
Sleepeze	$188	12,740		$203	15,120	$203	17,680
Plushette	310	10,450		366	11,740	375	14,220
Ultima	850	2,220		980	4,880	1,200	4,880

Prepare a revenue budget for the Sales Division for the coming year for each scenario.

Olympus, Inc.
Revenue Budget
For the Coming Year

	Pessimistic	Expected	Optimistic
Sleepeze	$fill in the blank 516680f50fcd03a_1	$fill in the blank 516680f50fcd03a_2	$fill in the blank 516680f50fcd03a_3
Plushette	fill in the blank 516680f50fcd03a_4	fill in the blank 516680f50fcd03a_5	fill in the blank 516680f50fcd03a_6
Ultima	fill in the blank 516680f50fcd03a_7	fill in the blank 516680f50fcd03a_8	fill in the blank 516680f50fcd03a_9
Total sales	$fill in the blank 516680f50fcd03a_10	$fill in the blank 516680f50fcd03a_11	$fill in the blank 516680f50fcd03a_12

2. Prepare a flexible expense budget for the Sales Division for the three scenarios above. If required, round answers to the nearest dollar.

Olympus, Inc.
Flexible Expense Budget
For the Coming Year

	Pessimistic	Expected	Optimistic
Salaries	$fill in the blank 5da9edfd6076048_1	$fill in the blank 5da9edfd6076048_2	$fill in the blank 5da9edfd6076048_3
Depreciation	fill in the blank 5da9edfd6076048_4	fill in the blank 5da9edfd6076048_5	fill in the blank 5da9edfd6076048_6
Office supplies and other	fill in the blank 5da9edfd6076048_7	fill in the blank 5da9edfd6076048_8	fill in the blank 5da9edfd6076048_9
Advertising:
Sleepeze and Plushette	fill in the blank 5da9edfd6076048_10	fill in the blank 5da9edfd6076048_11	fill in the blank 5da9edfd6076048_12
Ultima	fill in the blank 5da9edfd6076048_13	fill in the blank 5da9edfd6076048_14	fill in the blank 5da9edfd6076048_15
Commissions	fill in the blank 5da9edfd6076048_16	fill in the blank 5da9edfd6076048_17	fill in the blank 5da9edfd6076048_18
Shipping:
Sleepeze	fill in the blank 5da9edfd6076048_19	fill in the blank 5da9edfd6076048_20	fill in the blank 5da9edfd6076048_21
Plushette	fill in the blank 5da9edfd6076048_22	fill in the blank 5da9edfd6076048_23	fill in the blank 5da9edfd6076048_24
Ultima	fill in the blank 5da9edfd6076048_25	fill in the blank 5da9edfd6076048_26	fill in the blank 5da9edfd6076048_27
Total	$fill in the blank 5da9edfd6076048_28	$fill in the blank 5da9edfd6076048_29	$fill in the blank 5da9edfd6076048_30

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