Marketing Expense Budget

Timothy Donaghy has developed a unique formula for growing hair. His proprietary lotion, used regularly for 45 days, will grow hair in bald spots (with varying degrees of success). Timothy calls his lotion Hair-Again and is selling it via the telephone and Internet. His major form of marketing is through 15-minute infomercials and Internet advertising. Timothy sells each 16-ounce bottle of Hair-Again for $15 and pays a commission of 3 percent of sales to telephone operators who field the 1-800 phone calls from potential customers. Fixed marketing expenses for each quarter of the coming year include:

Internet banner ads	$7,500
Telephone operator time	5,000
Travel	2,000

In addition, early next year Timothy intends to film and show infomercials on television. He expects the cost to be $10,000 in quarters 1 and 2, and that the cost will rise to $24,000 in each of quarters 3 and 4. Timothy expects the following unit sales of Hair-Again:

Quarter 1	5,000
Quarter 2	15,000
Quarter 3	40,000
Quarter 4	35,000

Required:

1. Construct a marketing expense budget for Hair-Again for the coming year. Show total amounts by quarter and in total for the year. If required, round your answers to two decimal places.

Hair-Again
Marketing Expense Budget
For the Year Ended December 31
	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Total
Budgeted unit sales	fill in the blank 3f71ba01b007f95_2	fill in the blank 3f71ba01b007f95_3	fill in the blank 3f71ba01b007f95_4	fill in the blank 3f71ba01b007f95_5	fill in the blank 3f71ba01b007f95_6
Unit variable expense	$fill in the blank 3f71ba01b007f95_8	$fill in the blank 3f71ba01b007f95_9	$fill in the blank 3f71ba01b007f95_10	$fill in the blank 3f71ba01b007f95_11	$fill in the blank 3f71ba01b007f95_12
Total variable expense	$fill in the blank 3f71ba01b007f95_13	$fill in the blank 3f71ba01b007f95_14	$fill in the blank 3f71ba01b007f95_15	$fill in the blank 3f71ba01b007f95_16	$fill in the blank 3f71ba01b007f95_17
Fixed marketing expense:
Internet ads	$fill in the blank 3f71ba01b007f95_19	$fill in the blank 3f71ba01b007f95_20	$fill in the blank 3f71ba01b007f95_21	$fill in the blank 3f71ba01b007f95_22	$fill in the blank 3f71ba01b007f95_23
Television time	fill in the blank 3f71ba01b007f95_25	fill in the blank 3f71ba01b007f95_26	fill in the blank 3f71ba01b007f95_27	fill in the blank 3f71ba01b007f95_28	fill in the blank 3f71ba01b007f95_29
Telephone operators	fill in the blank 3f71ba01b007f95_31	fill in the blank 3f71ba01b007f95_32	fill in the blank 3f71ba01b007f95_33	fill in the blank 3f71ba01b007f95_34	fill in the blank 3f71ba01b007f95_35
Travel	fill in the blank 3f71ba01b007f95_37	fill in the blank 3f71ba01b007f95_38	fill in the blank 3f71ba01b007f95_39	fill in the blank 3f71ba01b007f95_40	fill in the blank 3f71ba01b007f95_41
Total fixed expense	$fill in the blank 3f71ba01b007f95_42	$fill in the blank 3f71ba01b007f95_43	$fill in the blank 3f71ba01b007f95_44	$fill in the blank 3f71ba01b007f95_45	$fill in the blank 3f71ba01b007f95_46
Total marketing expense	$fill in the blank 3f71ba01b007f95_47	$fill in the blank 3f71ba01b007f95_48	$fill in the blank 3f71ba01b007f95_49	$fill in the blank 3f71ba01b007f95_50	$fill in the blank 3f71ba01b007f95_51

Feedback

The marketing expense budget outlines planned expenditures for selling and distribution activities which can also be broken into fixed and variable components.

2. What if the cost of internet ads rises to $15,000 in Quarters 2 through 4? How would that affect variable marketing expense? Fixed marketing expense? Total marketing expense? If no effect, enter "0" and select "no impact".

Variable marketing expense	$fill in the blank 25d070fc1046fbe_1	no impact
Fixed marketing expense	$fill in the blank 25d070fc1046fbe_3	higher
Total marketing expense	$fill in the blank 25d070fc1046fbe_5	higher