Smiths Department Store needs to decide which advertising budgeting method to use. The following information is needed to calculate Smiths advertising budget using all three methods.

• Affordable Budget Method

Last years sales were $9,815,000 and are projected to increase by 4.5% for next year. Last years expenses were 41% of last years sales and are projected to decrease by 1.5% for next year. Last year the business earned a profit of $4,587,600. Profit is expected to increase by 2% over last years figures. Based on the last years figures and the projected changes in sales, expenses and profit, calculated forecasted sales, expenses and profits for the upcoming year. Calculate the amount left to spend on advertising.

Forecasted sales $10,256,675 Forecasted expenses $4,051,387

Forecasted profit expectation $4,679,352

Amount left to spend on advertising $1,525,936

• Percentage of Sales Method

The following are the percentage of sales figures other department stores in the country use to determine advertising budgets. Calculate the mean or average for the industry: 5%, 7.5%, 4%, 11%, 9.75%, 10%, and 8%. The average or mean for the industry is _____

Based on the industry mean/average, and using the forecasted sales for Smiths in the affordable budget method from above, what is the amount Smiths should use for its advertising budget? _____

• Budget Based on Objectives Method

Below are the activities on which Smiths Department Store will base its budget for the entire year.

Month	Sales Goal	Sales Event	Advertising Cost	% of Sales
January	$256,417	Winter Clearance	$8,975
February	$299,153	Valentines & Presidents Days	$14,958
March-April	$598,306	Easter, Spring Fling	$50,856
May-June	$683,778	Summer Days	$30,770
July	$854,723	July 4th and Clearance	$66,241
August	$923,850	Back to School	$64,670
September October	$1,500,730	Fall Fashions	$127,562
November-December	$3,750,000	Winter Sale	$337,500
December	$1,389,718	General Christmas Sale	$90,332
Totals		XXXXX