Question
Review the following SG&A budget that was prepared at the beginning of the current year. The economy appears to be slowing, and sales are now
Review the following SG&A budget that was prepared at the beginning of the current year. The economy appears to be slowing, and sales are now expected to run only 75% of plan. How much can now be expected to result for total SG&A?
The only fixed cost that can be reduced relates to the advertising campaign. What are the possible impacts of attempting to save money by cutting a portion of the advertising budget?
Selling, General, and Administrative Budget | |
For the Year Ending December 31, 20X7 | |
Estimated units sold | 87,500 |
X Per unit variable SG&A | X $ 5.50 |
Total variable SG&A | $ 481,250 |
Fixed SG&A | |
Salaries | $ 467,500 |
Office | 112,000 |
Advertising | 292,500 |
Other | 39,250 |
Total fixed SG&A | $ 911,250 |
Total budgeted SG&A | $ 1,392,500 |
Worksheet 7
The following revised budget should reflect only 75% of the sales volume included in the original plan) units:
Selling, General, and Administrative Budget | |
For the Year Ending December 31, 20X7 | |
Estimated units sold | |
X Per unit variable SG&A | |
Total variable SG&A | |
Fixed SG&A | |
Salaries | |
Office | |
Advertising | |
Other | |
Total fixed SG&A | |
Total budgeted SG&A | |
|
|
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