Timothy Donaghy has developed a unique formula for growing hair. His proprietary lotion, used regularly for 45 days, will grow hair in bald spots (with varying degrees of success). Timothy calls his lotion Hair-Again and is selling it via the telephone and Internet.

His major form of marketing is through 15-minute infomercials and Internet advertising.

Timothy sells each 16-ounce bottle of Hair-Again for $15 and pays a commission of 3 percent of sales to telephone operators who field the 1-800 phone calls from potential customers. Fixed marketing expenses for each quarter of the coming year include:

Required:
1. Construct a marketing expense budget for Hair-Again for the coming year. Show total amounts by quarter and in total for the year.
2. What if the cost of television time rises to $15,000 in Quarters 2 through 42 How would that affect variable marketing expense? Fixed marketing expense? Total marketing expense?LO1

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Internet banner ads Television time Telephone operator time Travel $ 7,600 10,000 4,000 3,000 In addition, early next year Timothy intends to develop and film the infomercial he will be showing on television. The one-time cost is expected to be $65,000. Timothy expects the following unit sales of Hair-Again: Quarter 1 5,000 Quarter 2 15,000 Quarter 3 40,000 Quarter 4 35,000