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 15,090 for the Sleepeze, 11,910 for the Plushette, and 4,730 for the Ultima. Gene Dixon, vice president of sales, has provided the following information:

1. Salaries for his office (including himself at $62,500, a marketing research assistant at $35,050, and an administrative assistant at $23,250) are budgeted for $120,800 next year.
2. Depreciation on the offices and equipment is $18,500 per year.
3. Office supplies and other expenses total $18,600 per year.
4. Advertising has been steady at $20,250 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 15 percent of first-year Ultima sales for a print and television campaign.
5. 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.
6. Last year, shipping for the Sleepeze and Plushette lines averaged $55 per unit sold. Gene expects the Ultima line to ship for $80 per unit sold since this model features a larger mattress.

Required:

1. Suppose that Gene is considering three sales scenarios as follows:

	Pessimistic			Expected			Optimistic
	Price	Quantity		Price	Quantity		Price	Quantity
Sleepeze	$183	12,630		$202	15,090		$202	18,460
Plushette	305	9,940		354	11,910		365	14,140
Ultima	920	2,210		990	4,730		1,210	4,730

Prepare a revenue budget for the Sales Division for the coming year for each scenario.

Olympus, Inc.
Revenue Budget
For the Coming Year
	Pessimistic	Expected	Optimistic
Sleepeze	$fill in the blank 649921014042055_1	$fill in the blank 649921014042055_2	$fill in the blank 649921014042055_3
Plushette	fill in the blank 649921014042055_4	fill in the blank 649921014042055_5	fill in the blank 649921014042055_6
Ultima	fill in the blank 649921014042055_7	fill in the blank 649921014042055_8	fill in the blank 649921014042055_9
Total sales	$fill in the blank 649921014042055_10	$fill in the blank 649921014042055_11	$fill in the blank 649921014042055_12

2. Prepare a flexible expense budget for the Sales Division for the three scenarios above. If required, round answers to the nearest dollar.

Olympus, Inc.
Flexible Expense Budget
For the Coming Year
	Pessimistic	Expected	Optimistic
Salaries	$fill in the blank 5dea9d0de03a024_1	$fill in the blank 5dea9d0de03a024_2	$fill in the blank 5dea9d0de03a024_3
Depreciation	fill in the blank 5dea9d0de03a024_4	fill in the blank 5dea9d0de03a024_5	fill in the blank 5dea9d0de03a024_6
Office supplies and other	fill in the blank 5dea9d0de03a024_7	fill in the blank 5dea9d0de03a024_8	fill in the blank 5dea9d0de03a024_9
Advertising:
Sleepeze and Plushette	fill in the blank 5dea9d0de03a024_10	fill in the blank 5dea9d0de03a024_11	fill in the blank 5dea9d0de03a024_12
Ultima	fill in the blank 5dea9d0de03a024_13	fill in the blank 5dea9d0de03a024_14	fill in the blank 5dea9d0de03a024_15
Commissions	fill in the blank 5dea9d0de03a024_16	fill in the blank 5dea9d0de03a024_17	fill in the blank 5dea9d0de03a024_18
Shipping:
Sleepeze	fill in the blank 5dea9d0de03a024_19	fill in the blank 5dea9d0de03a024_20	fill in the blank 5dea9d0de03a024_21
Plushette	fill in the blank 5dea9d0de03a024_22	fill in the blank 5dea9d0de03a024_23	fill in the blank 5dea9d0de03a024_24
Ultima	fill in the blank 5dea9d0de03a024_25	fill in the blank 5dea9d0de03a024_26	fill in the blank 5dea9d0de03a024_27
Total	$fill in the blank 5dea9d0de03a024_28	$fill in the blank 5dea9d0de03a024_29	$fill in the blank 5dea9d0de03a024_30