As the manager of the marketing department, you are being asked for the first time to develop a department budget. The accounting department has supplied you with the following projected information about how this year, 20XX, will end up for your department's spending.
|
Expense category
|
20XX projected
|
|
Sales force base salary
|
200,000
|
|
Sales force commission
|
200,000
|
|
Sales force benefits
|
60,000
|
|
Trade show space rental
|
50,000
|
|
Free coupon expense
|
40,000
|
|
|
|
Note:
|
|
|
Sales
|
2,000,000
|
Before you begin the process, your manager and you have sat down to develop broad planning objectives for the upcoming year, which you will need to incorporate into the budget. These include a doubling of trade show spending.
an increase of the sales force by 25%.
an expected sales volume increase of 10%.
an expected increase of 4% of all expenses due to inflation.
no anticipated selling price changes for next year.
You need to do the following:
for each of the listed expenses:
identify whether you would treat them as a fixed or variable cost explain the reasoning for your classification based on the historical information and the planning you did for new marketing programs for the upcoming year, prepare a budget for the upcoming year by completing the table:
In the 20XX+1 column, fill in budgeted figures.
In the next column, when appropriate, adjust that amount for inflation. Complete the next column based on the projected volume increase.
|
Expense category
|
20XX projected
|
20XX+1 with plan changes
|
20XX+1 with inflation changes
|
20XX+1 with volume impact
|
Explanation
|
|
Sales force base salary
|
200,000
|
|
|
|
|
|
Sales force commission
|
200,000
|
|
|
|
|
|
Sales force benefits
|
60,000
|
|
|
|
|
|
Trade show space rental
|
50,000
|
|
|
|
|
|
Free coupon expense
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
|
|
|
|
|
|
Sales
|
2,000,000
|
2,200,000
|
|
|
|