CASE 2

The following First Quarter projected information is provided for Colossal Marketing, a Service Business that provides creative services to its clients:

1. In January it is expected that the Business will complete 260 hours of work for its clients and charge them an average rate of $120 / Hr
2. In February it is expected that the Business will complete 280 hours of work for its clients and charge them an average rate of $125 / Hr
3. In March it is expected that the Business will complete 250 hours of work for its clients and charge them an average rate of $110 / Hr

4. The following Direct Labour Hours and Rates are expected to be incurred equally each month:

• Account Managers 80 hours at $70/Hr
• Creative and Art Directors 100 hours at $50/Hr
• Media Buyers 40 hours at $40/Hr

5. General Overhead for each month is as follows:

Variable

Couriers $1.50 per Direct Labour Hour

Fixed

Rent $ 4,000

Utilities $ 2,000

Salaries $ 20,000

Amortization $ 1,000

Insurance $ 1,500

Advertising $ 3,500

Miscellaneous. $ 500

REQUIRED: Using a Spreadsheet or Word document, prepare the following detailed Budgets on a monthly basis for the First Quarter ending March 31^st:

-Service Revenue Budget

-Direct Labour Budget

-General Overhead Budget

-Budgeted Income Statement