Question
Sales Forecast and Flexible Budget Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are
Sales Forecast and Flexible Budget
Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,150 for the Sleepeze, 12,190 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 $65,150, a marketing research assistant at $44,250, and an administrative assistant at $26,350) are budgeted for $135,750 next year.
- Depreciation on the offices and equipment is $17,650 per year.
- Office supplies and other expenses total $20,250 per year.
- Advertising has been steady at $21,000 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 10 percent of first-year Ultima sales for a print and television campaign.
- Commissions on the Sleepeze and Plushette lines are 5 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 $55 per unit sold. Gene expects the Ultima line to ship for $70 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 | 12,330 | $204 | 15,150 | $204 | 18,070 | ||
Plushette | 309 | 9,890 | 350 | 12,190 | 359 | 14,070 | ||
Ultima | 900 | 2,110 | 1,000 | 4,720 | 1,180 | 4,720 |
Prepare a revenue budget for the Sales Division for the coming year for each scenario.
Pessimistic | Expected | Optimistic | |
---|---|---|---|
Sleepeze | $fill in the blank 319f3a02bfccf9a_1 | $fill in the blank 319f3a02bfccf9a_2 | $fill in the blank 319f3a02bfccf9a_3 |
Plushette | fill in the blank 319f3a02bfccf9a_4 | fill in the blank 319f3a02bfccf9a_5 | fill in the blank 319f3a02bfccf9a_6 |
Ultima | fill in the blank 319f3a02bfccf9a_7 | fill in the blank 319f3a02bfccf9a_8 | fill in the blank 319f3a02bfccf9a_9 |
Total sales | $fill in the blank 319f3a02bfccf9a_10 | $fill in the blank 319f3a02bfccf9a_11 | $fill in the blank 319f3a02bfccf9a_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.
Pessimistic | Expected | Optimistic | |
---|---|---|---|
Salaries | $fill in the blank 7018e701c06802c_1 | $fill in the blank 7018e701c06802c_2 | $fill in the blank 7018e701c06802c_3 |
Depreciation | fill in the blank 7018e701c06802c_4 | fill in the blank 7018e701c06802c_5 | fill in the blank 7018e701c06802c_6 |
Office supplies and other | fill in the blank 7018e701c06802c_7 | fill in the blank 7018e701c06802c_8 | fill in the blank 7018e701c06802c_9 |
Advertising: | |||
Sleepeze and Plushette | fill in the blank 7018e701c06802c_10 | fill in the blank 7018e701c06802c_11 | fill in the blank 7018e701c06802c_12 |
Ultima | fill in the blank 7018e701c06802c_13 | fill in the blank 7018e701c06802c_14 | fill in the blank 7018e701c06802c_15 |
Commissions | fill in the blank 7018e701c06802c_16 | fill in the blank 7018e701c06802c_17 | fill in the blank 7018e701c06802c_18 |
Shipping: | |||
Sleepeze | fill in the blank 7018e701c06802c_19 | fill in the blank 7018e701c06802c_20 | fill in the blank 7018e701c06802c_21 |
Plushette | fill in the blank 7018e701c06802c_22 | fill in the blank 7018e701c06802c_23 | fill in the blank 7018e701c06802c_24 |
Ultima | fill in the blank 7018e701c06802c_25 | fill in the blank 7018e701c06802c_26 | fill in the blank 7018e701c06802c_27 |
Total | $fill in the blank 7018e701c06802c_28 | $fill in the blank 7018e701c06802c_29 | $fill in the blank 7018e701c06802c_30 |
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