Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 14,950 for the Sleepeze, 12,300 for the Plushette, and 4,720 for the Ultima. Gene Dixon, vice president of sales, has provided the following information:

Salaries for his office (including himself at $67,000, a marketing research assistant at $37,050, and an administrative assistant at $27,100) are budgeted for $131,150 next year.

Depreciation on the offices and equipment is $18,900 per year.

Office supplies and other expenses total $23,400 per year.

Advertising has been steady at $19,550 per year. However, the Ultima is a new product and will require extensive advertising to educate consumers on the unique features of this high-end mattress. Gene believes the company should spend 20 percent of first-year Ultima sales for a print and television campaign.

Commissions on the Sleepeze and Plushette lines are 3 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 $45 per unit sold. Gene expects the Ultima line to ship for $75 per unit sold since this model features a larger mattress.

Required:

Question Content Area

1. Suppose that Gene is considering three sales scenarios as follows:

	Pessimistic			Expected			Optimistic
	Price	Quantity		Price	Quantity		Price	Quantity
Sleepeze	$188	12,200		$212	14,950		$212	17,550
Plushette	307	10,480		362	12,300		373	13,800
Ultima	870	1,870		970	4,720		1,200	4,720

Prepare a revenue budget for the Sales Division for the coming year for each scenario.

Olympus, Inc. Revenue Budget For the Coming Year

	Pessimistic	Expected	Optimistic
Sleepeze	$fill in the blank 244338f5100b010_1	$fill in the blank 244338f5100b010_2	$fill in the blank 244338f5100b010_3
Plushette	fill in the blank 244338f5100b010_4	fill in the blank 244338f5100b010_5	fill in the blank 244338f5100b010_6
Ultima	fill in the blank 244338f5100b010_7	fill in the blank 244338f5100b010_8	fill in the blank 244338f5100b010_9
Total sales	$fill in the blank 244338f5100b010_10	$fill in the blank 244338f5100b010_11	$fill in the blank 244338f5100b010_12

Question Content Area

2. Prepare a flexible expense budget for the Sales Division for the three scenarios above. If required, round answers to the nearest dollar.

Olympus, Inc. Flexible Expense Budget For the Coming Year

	Pessimistic	Expected	Optimistic
Salaries	$fill in the blank a59428fc8060f9c_1	$fill in the blank a59428fc8060f9c_2	$fill in the blank a59428fc8060f9c_3
Depreciation	fill in the blank a59428fc8060f9c_4	fill in the blank a59428fc8060f9c_5	fill in the blank a59428fc8060f9c_6
Office supplies and other	fill in the blank a59428fc8060f9c_7	fill in the blank a59428fc8060f9c_8	fill in the blank a59428fc8060f9c_9
Advertising:
Sleepeze and Plushette	fill in the blank a59428fc8060f9c_10	fill in the blank a59428fc8060f9c_11	fill in the blank a59428fc8060f9c_12
Ultima	fill in the blank a59428fc8060f9c_13	fill in the blank a59428fc8060f9c_14	fill in the blank a59428fc8060f9c_15
Commissions	fill in the blank a59428fc8060f9c_16	fill in the blank a59428fc8060f9c_17	fill in the blank a59428fc8060f9c_18
Shipping:
Sleepeze	fill in the blank a59428fc8060f9c_19	fill in the blank a59428fc8060f9c_20	fill in the blank a59428fc8060f9c_21
Plushette	fill in the blank a59428fc8060f9c_22	fill in the blank a59428fc8060f9c_23	fill in the blank a59428fc8060f9c_24
Ultima	fill in the blank a59428fc8060f9c_25	fill in the blank a59428fc8060f9c_26	fill in the blank a59428fc8060f9c_27
Total	$fill in the blank a59428fc8060f9c_28	$fill in the blank a59428fc8060f9c_29	$fill in the blank a59428fc8060f9c_30