You are the Director of Sales and Marketing for "ACME Gizmo's", a manufacturer and wholesaler of electronic gizmos and gadgets. You manage an organization of 24 people who are involved in various Sales and Marketing activities. Your organization is responsible for the marketing/advertisement campaigns for all products, and sales activities related to the wholesale of products to retailers. The companies products are grouped in 'Product Lines', which represent similar, but different, products (e.g. 'Electronics', Tools', etc.). Each year a certain number of products are designated by management as 'High Focus', due to the potential for sales or market share. ACME has no 'Direct Sales', all Sales are made to Retailers to sell in their stores. Note, do not include yourself in this budget estimate.

Marketing and Sales Staff are salaried employees, and are not paid for overtime.

Administrative Staff are hourly employees, paid 'time-and-1/2' for each hour overtime worked Sales Staff is paid Salary + Commission (based on sales), all others are salary only Assume 238 work days per year (52 wks * 5 days/wk less 22 days vacation/holiday)

Each Employee results in an annual 'burden' cost of $12,500, to cover the overhead costs of the office space and supplies.

Staff attrition is considered negligible, employees that leave are readily replaced, and replacement cost does not need to be included in your budget.

To foster morale and performance, Monthly 'Sales' (sales staff) and 'Employee of the Month' (Marketing and Admin staff) awards are given, each award averages $100.

The annual fiscal year is from January to December (calendar year)

Raises in Employees salaries are given at the end of each fiscal year.

Marketing Staff:

8 people

Avg Annual Base Salary (inc benefits): $75,000

Annual Avg Commission: n/a

Product Lines Promoted: 6

'High Focus' Products: 2

Annual Training Allocation: $2,000 / employee

Sales Staff:

12 people

Avg Annual Base Salary (inc benefits): $45,000

Annual Avg Commission: $40,000

Avg # Clients: 8

Travel/Expense Allocation: $15,000 / salesperson

Annual Training Allocation: $5,000 / employee

Administrative Staff:

4 people

Avg Annual Base Salary (inc benefits): $45,000

Annual Avg Commission: n/a

Avg Hours Overtime: 4 hrs / week

Annual Training Allocation: $750 / employee

Marketing Efforts:

Market Analysis Study, 2 times / yr, $30,000 per study

Advertising: Refresh all Product Line Ads Annually

Quarterly 'Special' Ads for High Focus Products

Average Cost / Ad: $25,000

Sales Efforts:

3 Trade Shows Attended Annually (end of Qtrs 1,2, and 3): $4,500 / show

Give Aways' for sales calls and promotional events: $3,200

Create your Organizational Budget Sheet below, and answer the following questions:

1) What is your total annual operational budget?

2) Given your staffing level and Product Lines remain the same, what are some examples of the 'fixed' costs in your budget?

3) What are some examples of variable, or discretionary, budget costs?