The marketing plan at E-Tech Systems is based on a corporate restructure which divides the company into two separate groups: (1) Commercial Systems and (2) Personal Systems. Samantha Smith was assigned responsibility for the Personal Systems group. The marketing plan, which included a sales forecast next year of $90million, was the result of a detailed market analysis. Sales representatives for the personal systems group would receive a 20 percent commission on sales of personal systems. Under the new organizational structure, the Personal Systems group would be charged with 35 percent of the budgeted sales force expenditure. The sales director's budget for salaries and benefits of the sales force and noncommission selling costs for both the Commercial and Personal Systems group was $25million. The advertising and promotion budget contained three elements: trade advertising, cooperative advertising, and sales promotion material. Advertising production and media placement costs were budgeted at $500,000. Cooperative advertising had budgeted production costs of $150,000. Cooperative advertising allowance policy stated that the company would allocate 15 percent of company sales to dealers to promote its systems. Sales promotion material was budgeted at 2 percent of company sales. Direct costs of material and labor and direct factory overhead to produce the Personal System product line represented 50 percent of sales. The company would assign $750,000 in indirect manufacturing overhead to the product line and $325,000 for administrative overhead. Freight for the product line would average 9 percent of sales. Samantha Smith's staff consisted of two managers and an assistant. Salaries and benefits for Samantha and her staff were $500,000 Using the information above to fill out the pro forma income statement below. In your response, use the letters A-Q to identify your answers (for example, to complete the table cell for "Sales", in the response you would type in "A. [this is my answer...].") Proforma Income Statement Sales Cost of Goods Sold (A) (B) (C) Gross Profit Marketing Expenses Sales Expenses Salary Commission Total Marketing Expenses (D) (E) (F) (G) (H) Advertising/Sales Promotion Advertising Coop Advertising Coop Allowance Sales Promotion Total Advertising/Sales Promotion (1) (J) (K) Freight Expenses Freight Costs (L) (M) General & Administration Expenses Manufacturing Fixed Costs Administrative Overhead Salaries/Benefits (N) (0) Marketing Expenses Sales Expenses Salary Commission Total Marketing Expenses (D) (E) (F) (G) Advertising/Sales Promotion Advertising Coop Advertising Coop Allowance Sales Promotion Total Advertising/Sales Promotion (H) (1) (J) (K) Freight Expenses Freight Costs (L) General & Administration Expenses Manufacturing Fixed Costs Administrative Overhead (M) (N) (0) Salaries/Benefits Total General & Admin Expenses (P) Net Profit (Q)
