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 15,000 for the Sleepeze, 12,380 for the Plushette, and 4,890 for the Ultima. Gene Dixon, vice president of sales, has provided the following information: Salaries for his office (including himself at $62,650, a marketing research assistant at $42,350, and an administrative assistant at $25,600) are budgeted for $130,600 next year. Depreciation on the offices and equipment is $21,800 per year. Office supplies and other expenses total $20,500 per year. Advertising has been steady at $20,000 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 10 percent of first-year Ultima sales for a print and television campaign. Commissions on the Sleepeze and Plushette lines are 3 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 $50 per unit sold. Gene expects the Ultima line to ship for $80 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 $185 12,460 $209 15,000 $209 17,980 Plushette 293 10,070 335 12,380 346 13,990 Ultima 900 1,950 1,030 4,890 1,200 4,890 Prepare a revenue budget for the Sales Division for the coming year for each scenario. Olympus, Inc.Revenue BudgetFor the Coming Year Pessimistic Expected Optimistic Sleepeze Plushette Ultima Total sales 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 BudgetFor the Coming Year Pessimistic Expected Optimistic Salaries Depreciation Office supplies and other Advertising: Sleepeze and Plushette Ultima Commissions Shipping: Sleepeze Plushette Ultima Total

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 15,000 for the Sleepeze, 12,380 for the Plushette, and 4,890 for the Ultima. Gene Dixon, vice president of sales, has provided the following information: Salaries for his office (including himself at $62,650, a marketing research assistant at $42,350, and an administrative assistant at $25,600) are budgeted for $130,600 next year. Depreciation on the offices and equipment is $21,800 per year. Office supplies and other expenses total $20,500 per year. Advertising has been steady at $20,000 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 10 percent of first-year Ultima sales for a print and television campaign. Commissions on the Sleepeze and Plushette lines are 3 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 $50 per unit sold. Gene expects the Ultima line to ship for $80 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 $185 12,460 $209 15,000 $209 17,980 Plushette 293 10,070 335 12,380 346 13,990 Ultima 900 1,950 1,030 4,890 1,200 4,890 Prepare a revenue budget for the Sales Division for the coming year for each scenario. Olympus, Inc.Revenue BudgetFor the Coming Year Pessimistic Expected Optimistic Sleepeze Plushette Ultima Total sales 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 BudgetFor the Coming Year Pessimistic Expected Optimistic Salaries Depreciation Office supplies and other Advertising: Sleepeze and Plushette Ultima Commissions Shipping: Sleepeze Plushette Ultima Total

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Chapter8: Budgeting For Planning And Control

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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 15,000 for the Sleepeze, 12,380 for the Plushette, and 4,890 for the Ultima. Gene Dixon, vice president of sales, has provided the following information:

Salaries for his office (including himself at $62,650, a marketing research assistant at $42,350, and an administrative assistant at $25,600) are budgeted for $130,600 next year.
Depreciation on the offices and equipment is $21,800 per year.
Office supplies and other expenses total $20,500 per year.
Advertising has been steady at $20,000 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 10 percent of first-year Ultima sales for a print and television campaign.
Commissions on the Sleepeze and Plushette lines are 3 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 $50 per unit sold. Gene expects the Ultima line to ship for $80 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	$185	12,460		$209	15,000	$209	17,980
Plushette	293	10,070		335	12,380	346	13,990
Ultima	900	1,950		1,030	4,890	1,200	4,890

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

Olympus, Inc.Revenue BudgetFor the Coming Year

	Pessimistic	Expected	Optimistic
Sleepeze
Plushette
Ultima
Total sales

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 BudgetFor the Coming Year

	Pessimistic	Expected	Optimistic
Salaries
Depreciation
Office supplies and other
Advertising:
Sleepeze and Plushette
Ultima
Commissions
Shipping:
Sleepeze
Plushette
Ultima
Total

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 15,000 for the Sleepeze, 12,380 for the Plushette, and 4,890 for the Ultima. Gene Dixon, vice president of sales, has provided the following information:
a. Salaries for his office (including himself at $62,650, a marketing research assistant at $42,350, and an administrative assistant at $25,600) are budgeted for $130,600 next year.
b. Depreciation on the offices and equipment is $21,800 per year.
c. Office supplies and other expenses total $20,500 per year.
d. Advertising has been steady at $20,000 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 10 percent of first-year Ultima sales for a print
and television campaign.
e. Commissions on the Sleepeze and Plushette lines are 3 percent of sales. These commissions are paid to independent jobbers who sell the mattresses to retail stores.
f. Last year, shipping for the Sleepeze and Plushette lines averaged $50 per unit sold. Gene expects the Ultima line to ship for $80 per unit sold since this model features a larger mattress.
Required:
1. Suppose that Gene is considering three sales scenarios as follows:
Expected
Optimistic
Pessimistic
Price Quantity
Price Quantity
$209 15,000
Sleepeze $185 12,460
Plushette
293 10,070
335 12,380
900 1,950
1,030 4,890
Ultima
Sleepeze
Plushette
Ultima
Prepare a revenue budget for the Sales Division for the coming year for each scenario.
Olympus, Inc.
Revenue Budget
For the Coming Year
Total sales
Price Quantity
$209 17,980
346 13,990
Pessimistic Expected Optimistic
1,200 4,890
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

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
Salaries
Depreciation
Office supplies and other
Advertising:
Sleepeze and Plushette
Ultima
Commissions
Shipping:
Total
Sleepeze
Plushette
Ultima
Pessimistic Expected Optimistic
E
EE
ON
0000

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