SPU, Ltd., has just received its sales expense report for January, which follows. Item Amount Sales commissions $ 430,500 Sales staff salaries 88,400 Telephone and mailing 51,000 Building lease payment 50,000 Utilities 16,100 Packaging and delivery 74,000 Depreciation 38,750 Marketing consultants 61,190 You have been asked to develop budgeted costs for the coming year. Because this month is typical, you decide to prepare an estimated budget for a typical month in the coming year and you uncover the following additional data: Sales volume is expected to increase by 14 percent. Sales prices are expected to decrease by 10 percent. Commissions are based on a percentage of sales revenue. Sales staff salaries will increase 4 percent next year regardless of sales volume. Building rent is based on a five-year lease that expires in three years. Telephone and mailing expenses are scheduled to increase by 10 percent even with no change in sales volume. However, these costs are variable with the number of units sold, as are packaging and delivery costs. Utilities costs are scheduled to increase by 5 percent regardless of sales volume. Depreciation includes furniture and fixtures used by the sales staff. The company has just acquired an additional $54,000 in furniture that will be received at the start of next year and will be depreciated over a 10-year life using the straight-line method. Marketing consultant expenses were for a special advertising campaign that runs from time to time. During the coming year, these costs are expected to average $64,500 per month. Required: Prepare a budget for sales expenses for a typical month in the coming year. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)

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

Problem 11CE: Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted...

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SPU, Ltd., has just received its sales expense report for January, which follows.

Item	Amount
Sales commissions	$	430,500
Sales staff salaries		88,400
Telephone and mailing		51,000
Building lease payment		50,000
Utilities		16,100
Packaging and delivery		74,000
Depreciation		38,750
Marketing consultants		61,190

You have been asked to develop budgeted costs for the coming year. Because this month is typical, you decide to prepare an estimated budget for a typical month in the coming year and you uncover the following additional data:

Sales volume is expected to increase by 14 percent.
Sales prices are expected to decrease by 10 percent.
Commissions are based on a percentage of sales revenue.
Sales staff salaries will increase 4 percent next year regardless of sales volume.
Building rent is based on a five-year lease that expires in three years.
Telephone and mailing expenses are scheduled to increase by 10 percent even with no change in sales volume. However, these costs are variable with the number of units sold, as are packaging and delivery costs.
Utilities costs are scheduled to increase by 5 percent regardless of sales volume.
Depreciation includes furniture and fixtures used by the sales staff. The company has just acquired an additional $54,000 in furniture that will be received at the start of next year and will be depreciated over a 10-year life using the straight-line method.
Marketing consultant expenses were for a special advertising campaign that runs from time to time. During the coming year, these costs are expected to average $64,500 per month.

Required:

Prepare a budget for sales expenses for a typical month in the coming year. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)

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