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Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 1 5 , 1 1
Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are for the Sleepeze, for the Plushette, and for the Ultima. Gene Dixon, vice president of sales, has provided the following information: Salaries for his office including himself at $ a marketing research assistant at $ and an administrative assistant at $ are budgeted for $ next year. Depreciation on the offices and equipment is $ per year. Office supplies and other expenses total $ per year. Advertising has been steady at $ per year. However, the Ultima is a new product and will require extensive advertising to educate consumers on the unique features of this highend mattress. Gene believes the company should spend percent of firstyear Ultima sales for a print and television campaign. Commissions on the Sleepeze and Plushette lines are 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 $ per unit sold. Gene expects the Ultima line to ship for $ 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 $ $ $ Plushette Ultima 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 Shipping Jobbers Basic ads Ultima ads Office management Additional information is as follows: Depreciation on the office equipment belongs to the office management activity. Of the $ for office supplies and other expenses, $ can be assigned to telephone costs which can be split evenly between the shipping and jobbers' activities. An additional $ per year is attributable to Internet connections and fees, and the bulk of these costs 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 Prepare an activitybased budget for next year by activity. Use the expected level of sales activity. If required, round answers to the nearest dollar. Olympus, Inc. ActivityBased Budget For Next Year Research: $ Select Select $ Select Shipping: $ Select Select Select Select Select Select Jobbers: $ Select Select Select Select Basic ads: $ Select Select Select Ultima ads: $ Select Select Select Office management: $ Select Select Select Select Total $fill in the blank afafbdffa Question Content Area On the basis of the budget prepared in Requirement advise Gene regarding actions that might be taken to reduce expenses.
Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are for the Sleepeze, for the Plushette, and for the Ultima. Gene Dixon, vice president of sales, has provided the following information:
Salaries for his office including himself at $ a marketing research assistant at $ and an administrative assistant at $ are budgeted for $ next year.
Depreciation on the offices and equipment is $ per year.
Office supplies and other expenses total $ per year.
Advertising has been steady at $ per year. However, the Ultima is a new product and will require extensive advertising to educate consumers on the unique features of this highend mattress. Gene believes the company should spend percent of firstyear Ultima sales for a print and television campaign.
Commissions on the Sleepeze and Plushette lines are 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 $ per unit sold. Gene expects the Ultima line to ship for $ 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 $ $ $
Plushette
Ultima
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
Shipping
Jobbers
Basic ads
Ultima ads
Office management
Additional information is as follows:
Depreciation on the office equipment belongs to the office management activity.
Of the $ for office supplies and other expenses, $ can be assigned to telephone costs which can be split evenly between the shipping and jobbers' activities. An additional $ per year is attributable to Internet connections and fees, and the bulk of these costs 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
Prepare an activitybased budget for next year by activity. Use the expected level of sales activity. If required, round answers to the nearest dollar.
Olympus, Inc.
ActivityBased Budget
For Next Year
Research:
$ Select
Select
$ Select
Shipping:
$ Select
Select
Select
Select
Select
Select
Jobbers:
$ Select
Select
Select
Select
Basic ads:
$ Select
Select
Select
Ultima ads:
$ Select
Select
Select
Office management:
$ Select
Select
Select
Select
Total $fill in the blank afafbdffa
Question Content Area
On the basis of the budget prepared in Requirement advise Gene regarding actions that might be taken to reduce expenses.
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