Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,550 for the Sleepeze, 12,600 for the Plushette, and 5,140 for the Ultima. Gene Dixon, vice president of sales, has provided the following information:

1. Salaries for his office (including himself at $67,250, a marketing research assistant at $40,000, and an administrative assistant at $24,150) are budgeted for $131,400 next year.
2. Depreciation on the offices and equipment is $21,050 per year.
3. Office supplies and other expenses total $20,150 per year.
4. Advertising has been steady at $18,350 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.
5. 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.
6. Last year, shipping for the Sleepeze and Plushette lines averaged $55 per unit sold. Gene expects the Ultima line to ship for $70 per unit sold since this model features a larger mattress.

Suppose that Gene is considering three sales scenarios as follows:

	Pessimistic			Expected			Optimistic
	Price	Quantity		Price	Quantity		Price	Quantity
Sleepeze	$187	12,260		$203	15,550		$203	17,580
Plushette	303	9,940		352	12,600		366	14,040
Ultima	890	1,960		1,010	5,140		1,210	5,140

Suppose Gene determines that next year's Sales Division activities include the following:

Researchresearching current and future conditions in the industry

Shippingarranging for shipping of mattresses and handling calls from purchasing agents at retail stores to trace shipments and correct errors

Jobberscoordinating the efforts of the independent jobbers who sell the mattresses

Basic adsplacing print and television ads for the Sleepeze and Plushette lines

Ultima adschoosing and working with the advertising agency on the Ultima account

Office managementoperating the Sales Division office

The percentage of time spent by each employee of the Sales Division on each of the above activities is given in the following table:

	Gene		Research Assistant		Administrative Assistant
Research	-		75	%	-
Shipping	30	%	-		25	%
Jobbers	10		10		15
Basic ads	-		15		35
Ultima ads	25		-		10
Office management	35		-		15

Additional information is as follows:

1. Depreciation on the office equipment belongs to the office management activity.
2. Of the $20,150 for office supplies and other expenses, $4,600 can be assigned to telephone costs which can be split evenly between the shipping and jobbers' activities. An additional $2,600 per year is attributable to Internet connections and fees, and the bulk of these costs (85 percent) are assignable to research. The remainder is a cost of office management. All other office supplies and costs are assigned to the office management activity.

Required:

Question Content Area

1. Prepare an activity-based budget for next year by activity. Use the expected level of sales activity. If required, round answers to the nearest dollar.

Olympus, Inc. Activity-Based Budget For Next Year

Research:
SalariesTelephoneShip SleepezeCommissionsAdvertisingSalaries	$Salaries
Internet connectionsTelephoneShip SleepezeCommissionsAdvertisingInternet connections	Internet connections	$Internet connections
Shipping:
CommissionsAdvertisingDepreciationOffice SuppliesSalariesSalaries	$Salaries
CommissionsAdvertisingDepreciationOffice SuppliesTelephoneTelephone	Telephone
CommissionsAdvertisingDepreciationOffice SuppliesShip SleepezeShip Sleepeze	Ship Sleepeze
CommissionsAdvertisingDepreciationOffice SuppliesShip PlushetteShip Plushette	Ship Plushette
CommissionsAdvertisingDepreciationOffice SuppliesShip UltimaShip Ultima	Ship Ultima	Ship Ultima
Jobbers:
DepreciationOffice SuppliesShip SleepezeSalariesShip UltimaShip Ultima	$Ship Ultima
DepreciationOffice SuppliesShip SleepezeTelephoneShip UltimaShip Sleepeze	Ship Sleepeze
DepreciationOffice SuppliesShip SleepezeCommissionsShip UltimaShip Sleepeze	Ship Sleepeze	Ship Sleepeze
Basic ads:
DepreciationOffice SuppliesShip SleepezeShip UltimaSalaries	$- Select -
DepreciationOffice SuppliesShip SleepezeShip UltimaAdvertising	- Select -	- Select -
Ultima ads:
DepreciationOffice SuppliesShip SleepezeShip UltimaSalaries	$- Select -
DepreciationOffice SuppliesShip SleepezeShip UltimaAdvertising	- Select -	- Select -
Office management:
SalariesInternet connectionsAdvertisingShip Ultima	$- Select -
DepreciationSalariesInternet connectionsAdvertisingShip Ultima	- Select -
Ship SleepezeSalariesInternet connectionsOffice SuppliesShip Ultima	- Select -	- Select -
Total			$fill in the blank 3ec1bcfcaffefe7_41