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 90% 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?

Estimated units sold 50,000

X per unit variable SG&A $4.00

Total variable SG&A $200,000

Fixed SG&a

Salaries $275,000

Office 60,000

Advertising 175,000

Other 25,000

Total fxed SG&A $535,000

Total budgeted SG&A $735,000