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 $$7,600$

Telephone operator time $4,000$

Travel $3,000$

In addition, early next year Timothy intends to film and show infomercials on television. He expects the cost to be $$10,000$ in quarters $1$ and $2,$ and that the cost will rise to $$25,000$ in each of quarters $3$ and $4.$ Timothy expects the following unit sales of Hair$-$Again:

Quarter $15,000$

Quarter $215,000$

Quarter $340,000$

Quarter $435,000$

Required:

Question Content Area

$1.$ 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 Budgeted unit sales Budgeted unit sales Budgeted unit sales Budgeted unit sales

$Unit variable expense $Unit variable expense $Unit variable expense $Unit variable expense $Unit variable expense

Total variable expense $fill in the blank $3013$f$7$ff$104$f$005\_13$ $fill in the blank $3013$f$7$ff$104$f$005\_14$ $fill in the blank $3013$f$7$ff$104$f$005\_15$ $fill in the blank $3013$f$7$ff$104$f$005\_16$ $fill in the blank $3013$f$7$ff$104$f$005\_17$

Fixed marketing expense:

$Internet ads $Internet ads $Internet ads $Internet ads $Internet ads

Television time Television time Television time Television time Television time

Telephone operators Telephone operators Telephone operators Telephone operators Telephone operators

Travel Travel Travel Travel Travel

Total fixed expense $fill in the blank $3013$f$7$ff$104$f$005\_42$ $fill in the blank $3013$f$7$ff$104$f$005\_43$ $fill in the blank $3013$f$7$ff$104$f$005\_44$ $fill in the blank $3013$f$7$ff$104$f$005\_45$ $fill in the blank $3013$f$7$ff$104$f$005\_46$

Total marketing expense $fill in the blank $3013$f$7$ff$104$f$005\_47$ $fill in the blank $3013$f$7$ff$104$f$005\_48$ $fill in the blank $3013$f$7$ff$104$f$005\_49$ $fill in the blank $3013$f$7$ff$104$f$005\_50$ $fill in the blank $3013$f$7$ff$104$f$005\_51$

Feedback Area

Feedback

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

Question Content Area

$2.$ 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 a$6$f$2$caff$2$fecf$91\_1$

Fixed marketing expense $fill in the blank a$6$f$2$caff$2$fecf$91\_3$

Total marketing expense $fill in the blank a$6$f$2$caff$2$fecf$91\_5$