Activity-Based Budget Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 14,980 for the Sleepeze, 12,360 for the Plushette, and 5,420 for the Ultima. Gene Dixon, vice president of sales, has provided the following information: Salaries for his office (including himself at $67,400, a marketing research assistant at $40,000, and an administrative assistant at $26,300) are budgeted for $133,700 next year. Depreciation on the offices and equipment is $22,450 per year. Office supplies and other expenses total $21,950 per year. Advertising has been steady at $21,350 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 15 percent of first-year Ultima sales for a print and television campaign. Commissions on the Sleepeze and Plushette lines are 5 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 $55 per unit sold. Gene expects the Ultima line to ship for $70 per unit sold since this model features a larger mattress. Suppose that Gene is considering three sales scenarios as follows: Pessimistic Expected Optimistic Price Quantity Price Quantity Price Quantity Sleepeze $182 12,530 $206 14,980 $206 18,020 Plushette 292 9,530 338 12,360 347 13,810 Ultima 940 2,260 1,030 5,420 1,200 5,420 Suppose Gene determines that next year's Sales Division activities include the following: Researchresearching current and future conditions in the industry Shippingarranging for shipping of mattresses and handling calls from purchasing agents at retail stores to trace shipments and correct errors Jobberscoordinating the efforts of the independent jobbers who sell the mattresses Basic adsplacing print and television ads for the Sleepeze and Plushette lines Ultima adschoosing and working with the advertising agency on the Ultima account Office managementoperating the Sales Division office The percentage of time spent by each employee of the Sales Division on each of the above activities is given in the following table: Gene Research Assistant Administrative Assistant Research - 75 % - Shipping 35 % - 25 % Jobbers 20 15 15 Basic ads - 10 30 Ultima ads 30 - 10 Office management 15 - 20 Additional information is as follows: Depreciation on the office equipment belongs to the office management activity. Of the $21,950 for office supplies and other expenses, $5,400 can be assigned to telephone costs which can be split evenly between the shipping and jobbers' activities. An additional $2,100 per year is attributable to Internet connections and fees, and the bulk of these costs (75 percent) are assignable to research. The remainder is a cost of office management. All other office supplies and costs are assigned to the office management activity. Required: Question Content Area 1. Prepare an activity-based budget for next year by activity. Use the expected level of sales activity. If required, round answers to the nearest dollar. Olympus, Inc. Activity-Based Budget For Next Year Research: $- Select - - Select - $- Select - Shipping: $- Select - - Select - - Select - - Select - - Select - - Select - Jobbers: $- Select - - Select - - Select - - Select - Basic ads: $- Select - - Select - - Select - Ultima ads: $- Select - - Select - - Select - Office management: $- Select - - Select - - Select - - Select - Total $fill in the blank bfb076fe5fc8f9b_41 Question Content Area 2. On the basis of the budget prepared in Requirement 1, advise Gene regarding actions that might be taken to reduce expenses.

Activity-Based Budget sales, has provided the following information: a. Salaries for his office (including himself at $67,400, a marketing research assistant at $40,000, and an administrative assistant at $26,300 ) are budgeted for $133,700 next year. b. Depreciation on the offices and equipment is $22,450 per year. c. Office supplies and other expenses total $21,950 per year. percent of first-year Ultima sales for a print and television campaign. e. Commissions on the Sleepeze and Plushette lines are 5 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 $55 per unit sold. Gene expects the Ultima line to ship for $70 per unit sold since this model features a larger mattress. Suppose that Gene is considering three sales scenarios as follows: Suppose Gene determines that next year's Sales Division activities include the following: Research-researching current and future conditions in the industry Shipping-arranging for shipping of mattresses and handling calls from purchasing agents at retail stores to trace shipments and correct errors Jobbers-coordinating the efforts of the independent jobbers who sell the mattresses Basic ads-placing print and television ads for the Sleepeze and Plushette lines Ultima ads-choosing and working with the advertising agency on the Ultima account Office management-operating the Sales Division office The percentage of time spent by each employee of the Sales Division on each of the above activities is given in the following table: Additional information is as follows: a. Depreciation on the office equipment belongs to the office management activity. fees, and the bulk of these costs ( 75 percent) are assignable to research. The remainder is a cost of office management. All other office supplies and costs are assigned to the office management activity. Required