Chapter Budgeting Planning and centrol O Exercise 8.29 Sales Forecast and Flexible Budget Olympus, Inc., manufactures three models of mattresses: sleepeze, the Plushette, and the Ultima. Forecast the 12,000 for the Plushette. and 5,000 for the Ultima. next year are 15.000 for the the following information: Gene xon, vice president of sales, has provided a. Salaries office Gncluding himself at s65.000. a marketing research assistant at and an administrative s25.000) are budgeted for S130,000 next year. b. Depreciation on the offices and equipment is per year. d. office supplies and other expenses total s21,000 per year. and Advertising has been steady at s20.000 per year. the Ultima is a new product 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 Ultma 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. Last year, shipping for the Sleepeze and Plushette lines averaged S50 per unit sold. Gene expects the Ultima line to ship for S75 per unit sold since this model features a larger mattress. Required: 1. Suppose that Gene is considering three sales scenarios as follows: Optimistic Pessimistic Expected Price Quantity Price Quantity Price Quantity 15,000 s 200 18,000 12,500 200 S180 14,000 10,000 350 12,000 Plushette 300 1,200 5.000 1,000 2.000 Ultima Prepare a revenue budget for the Sales Division for the coming year for each scenario. 2. Prepare a flexible expense budget for the Sales Division for the three scenarios above. d Budget