Income Statement	YEAR ONE				Income Statement	YEAR TWO
	Budgeted	Actual	VARIANCE + under budget (-) over budget			Budgeted	Actual	VARIANCE + under budget (-) over budget
Sales Revenue	$ 21,000,000	$ 22,500,000	$ (1,500,000)		Sales Revenue	$ 23,250,000	$ 20,450,000	2,800,000
Cost of Goods Sold	12,600,000	13,950,000	(1,350,000)		Cost of Goods Sold	14,298,750	12,679,000	1,619,750
Gross Profit	8,400,000	8,550,000	(150,000)		Gross Profit	8,951,250	7,771,000	1,180,250
SG&A Expense by Department (inclding salaries)					SG&A Expense by Department (inclding salaries)
Sales	2,310,000	2,410,000	(100,000)		Sales	2,441,250	2,351,750	89,500
Marketing	1,933,940	2,123,885	(189,945)		Marketing	1,963,159	1,883,619	79,540
I/T	315,000	318,000	(3,000)		I/T	327,600	325,000	2,600
Warehouse & Shipping	1,050,000	1,275,000	(225,000)		Warehouse & Shipping	1,278,750	1,022,500	256,250
Corporate Executives	950,000	1,250,000	(300,000)		Corporate Executives	997,500	975,500	22,000
TOTAL SG&A Expense	6,558,940	7,376,885	(817,945)		TOTAL SG&A Expense	7,008,259	6,558,369	449,890
Net Operating Profit	1,841,060	1,173,115	667,945		Net Operating Profit	1,942,991	1,212,631	730,360
Profit Margin	9%	5%			Profit Margin	8%	16%
Income Statement	CURRENT YEAR JAN - JUN
	Full Year Budget	Jan - Jun Actual Results
Sales Revenue	$ 23,000,000	$ 12,250,000
Cost of Goods Sold	14,490,000	7,533,750
Gross Profit	8,510,000	4,716,250
SG&A Expense by Department (inclding salaries)
Sales	2,300,000	1,286,250
Marketing	2,322,390	1,329,236
I/T	330,000	168,300
Warehouse & Shipping	1,150,000	551,250
Corporate Executives	1,027,425	436,656
TOTAL SG&A Expense	7,129,815	3,771,692
Net Operating Profit	1,380,185	944,558
Profit Margin	6%	8%

	ACTUAL RESULTS				Current Year Budget	Current Year Actuals
SALARIES	YEAR ONE	VARIANCE + under budget (-) over budget	YEAR TWO	VARIANCE + under budget (-) over budget	Jan - Dec 20xx	January - June
Marketing Manager (You)	120,000		123,500		125,000	57,250
Sr. Market Analyst	95,000		98,000		102,000	46,000
Sr. Market Analyst	80,000		85,000		87,000	43,000
Advertising Buyer	68,000		72,000		74,500	35,000
Creative Writer (1)	56,000		63,000		65,500	33,200
Graphic Designer (2)	23,500		56,000		57,500	21,200
Administrative Assistant (3)	45,000		48,000		49,250	26,500
TOTAL SALARIES	487,500	54,500	545,500	(15,470)	560,750	262,150
Salary Burden	131,625	14,715	147,285	(4,177)	154,206	72,091
Head Count Overhead	67,500	8,100	79,800	-	81,900	39,000
Salary Burden is calculated at 27% of salaries in year 1 and year 2 - increases to 27.5% in current operating year and will be 28% the budget year
Salary Burden includes all local, state and federal taxes; company portion of medical and life insurance; and company match of 401K plan
Head Count Overhead is the allocation of the company's fixed cost to each department on a monthly basis.
it is calculated by the number of employees you have each month x $900 in year 1, $950 in year 2 and $975 in current operating year.
The allocation will be held at $975 for the budget year
Bonuses earned are included in the actual and budgeted salaries.						Bonus % Paid Out		% Budgeted	% to Budget
Bonuses earned are in the same year they are awarded, paid out on the last check of the current operating year						Year 1	Year 2	Current Year	Budget Year
You can earn up to 15% of your base salary each year						15.0%	11.0%	12.5%	12.5%
The Sr. Market Analyst can earn from 5% to 8% of their base salary						8.0%	6.0%	7.5%	7.5%
The Ad buyer, creative writer and graphic designer can earn 3% to 5% of their base salary						5.0%	3.5%	4.5%	4.5%
The administrative assistant is on a quarterly bonuses plan and earns 1.5% to 3% of their quarterly salary						3.0%	3.0%	3.0%	3.0%
ALL BONUSUS ARE PRO-RATED BASED ON THE NUMBER OF MONTHS EMPLOYEED FOR THE YEAR
(1) Creative Writer was hired in September of year one
(2) Graphic Designer was hired in July of year one and quit in April of current operating year
(3) Your admin. assistant informed you that she will be retiring at the end of the year after 25 years of service to the company

	ACTUAL RESULTS				Current Year Budget	Current Year Actuals
	YEAR ONE	VARIANCE + under budget (-) over budget	YEAR TWO	VARIANCE + under budget (-) over budget	Jan - Dec 20xx	January - June
Radio Ad Buys	731,250	(101,250)	664,625	32,875	805,000	490,000
Newspaper Ad Buys	450,000	(135,000)	306,750	42,000	460,000	306,250
Mailers and Flyers	82,500	(2,500)	76,000	9,000	83,000	48,500
Conference Pamphlets	72,000	(4,000)	64,750	9,750	76,400	65,000
Postage	43,260	(6,260)	38,706	1,169	44,632	30,645
Travel	23,500	(3,500)	19,500	4,750	32,000	12,000
Professional License	5,000	-	5,500	(500)	5,500	2,500
Office Supplies	8,500	1,500	7,300	2,700	11,500	1,100
Software & License	21,250	(16,250)	7,500	(2,500)	7,500	-
ACTUAL SG&A EXPENSE	1,437,260	(267,260)	1,190,631	99,244	1,525,532	955,995

You are the manager of the marketing department of a company that imports products and wholesales them to retailers.

You have a staff of six professionals and are responsible for an annual budget of approximately $2M dollars. You report to the Senior VP of Sales and Marketing.

Because of your prior background in Finance the CEO of the company has asked for your help in providing an analysis for the past two years of budgeted dollars to actual results.

Your boss is concerned about your past and the current year results and has requested that you provide to her an analysis of the prior two years and a projection of where you will land at the end of the current year.

She also wants to see a preliminary budget for your department for next year.

Company Income Statements are provided for the prior two years that show the budgeted dollars and actual results for your company by department, and the current year budget with the first six months of actual operational results are available.

A breakdown of your departmental budget is provided for the prior two years that show the budgeted dollars and actual results by budget code. The current year budget with the first six months of actual results is also available.

Analysis Questions to answer for the CEO for Year One.

6 points

1.) In year one the company was over-budget in every category, including sales revenue, except Net Profit. Provide three reasons (excluding Corporate Executive) why this occurred.

5 points

2.) Why would Corporate Executive budget be 30% over budgeted amounts?

5 points

3.) With sales revenue $1.5M dollars over budget projection, did the increase in revenue help or hurt the company overall and explain your answer?

Analysis Questions to answer for the CEO for Year Two.

1.) In year two, one of the companys largest suppliers had quality issues with their product and one of their bigger clients went bankrupt, causing sales revenue to drop significantly.

12 points

List three areas that did a good job of controlling cost to off-set the revenue decrease and some plausible reasons as to how or why these areas were successful.

5 points

2.) Why would it seem like the I/T department did not decrease their spend in line with the other departments?

5 points

3.) Was year one or year two a better over-all year for the company and explain your answer?

Analysis Questions to answer for the Senior VP of Sales and Marketing.

5 points

1.) In year one your department was approximately 10% over-budget. Justify why this occurred.

5 points

2.) Your department was over budget two consecutive years in Software and Licensing, please provide an explanation.

5 points

3.) Explain what you did in year two to hold cost down.

5 points

4.) In the current year it looks like you are going to be a little over $300,000 over budget (15% ). What are your plans to get this under control?

Information for next years budget

Revenue is projected to be $24,150,000 based on expanding into the West Coast

A regional office is to be opened on the West Coast and the CEO expects all managers to spend time in the office as well as have a full time marketing employee at the office.

20 points

1.) Prepare next years budget based on the above information and past years experience.

20 points

2.) You must provide an explanation / justification for each line item in the budget and salaries can be considered one line item.