Estimate Administrative and Selling Budget: Compuware Corporation has just received its selling expense report for January. The report is reproduced below.

You have been asked to develop budgeted cost estimates for the coming year. Since this month is typical, you decide to prepare an estimated budget for a "typical month in the coming year.

You uncover the following additional data:

1. Sales volume is expected to increase by 5 percent.

2. Sales prices are expected to increase by 10 percent.

3. Commissions are based on a percentage of selling price.

4. Sales staff salaries are scheduled to increase 4 percent next year.

5. Building rent is based on a five-year lease that expires in three years.

6. Telephone and mailing expenses are scheduled to increase by 8 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.

7. Heat, light, and water are scheduled to increase by 12 percent regardless of sales volume.

8. Depreciation includes furniture and fixtures used by the sales staff. The company has just acquired an additional $19,000 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.

9. Marketing consultant expenses were for a special advertising campaign. The company runs these campaigns from time to time. During the coming year, the costs are expected to average $35,000 per month.

Required: Prepare a budget for selling expenses for a typical month in the coming year.

Transcribed Image Text:

Item Amount Sales commissions $135,000 Sales staff salaries 32,000 Telephone and mailing 16,200 Building lease payment 20.000 Heat, light, and water 4,100 Packaging and delivery 27,400 Depreciation 12,500 Marketing consultants 19,700