New Town Foods sells a variety of packaged foods through supermarkets and other outlets using a dedicated sales team. The budget planning group has just received the sales team expense summary for the third quarter, which follows Item Sales commissions Sales staff salaries Building lease payment Amount $510,000 121,000 75,600 Telephone and mailing Packaging and delivery Utilities Depreciation Marketing consultants 60,000 103,600 15,500 47,300 74,500 You have been asked to develop budgeted costs for the coming year. Because the third quarter is typical, the budget team develops the annual budget by starting with the budget for a "typical" quarter, based on the current experience adjusted for expected changes in the coming period. These expected changes include the following: Sales volume is expected to increase by 10 percent. Sales prices are expected to increase by 5 percent. Commissions are based on a percentage of sales revenue. Sales staff salaries will increase 3 percent next year regardless of sales volume. Building lease cost is based on a five-year lease that expires this year. Based on the local real estate market, the cost of the lease is expected to increase by 6 percent. Telephone and mailing expenses are variable with the number of units sold. In addition, the unit costs for these expenses are expected to decrease by 8 percent even with no change in sales volume. Packaging and delivery costs are variable with unit sales volume. Unit packaging and delivery costs are expected to increase by 5 percent next year. Utilities costs are scheduled to decrease by 6 percent regardless of sales volume. Depreciation includes furniture and fixtures used by the sales staff. The company has just acquired an additional $76,800 in furniture that will be received at the start of next year and will be depreciated over an 8-year life using the straight-line method. At the same time, fixtures with a quarterly depreciation of $6,200 will be scrapped. Marketing consultant expenses were for a special advertising campaign that runs from time to time. During the coming year, these costs are expected to average $92,000 per quarter.