A company is formulating its marketing expense budget for the last quarter of th

Question

A company is formulating its marketing expense budget for the last quarter of the year. Sales in units for the third quarter amounted to 2,400; sales volume for the fourth quarter is expected to increase by 10%. Variable marketing expenses per unit sold amount to approximately $0.15, paid in cash in month of sale. Fixed marketing expenses per month amount to $6,000 of salaries, $2,500 of depreciation (delivery trucks), and $1,200 of insurance (paid monthly).

What is the total budgeted marketing expense for the fourth quarter of the year?

A company is formulating its marketing expense budget for the last quarter of the year. Sales in units for the third quarter amounted to 2,400; sales volume for the fourth quarter is expected to increase by 10%. Variable marketing expenses per unit sold amount to approximately $0.15, paid in cash in month of sale. Fixed marketing expenses per month amount to $6,000 of salaries, $2,500 of depreciation (delivery trucks), and $1,200 of insurance (paid monthly).

Explanation / Answer

a Variable marketing expenses 396 =2400*1.1*0.15 Fixed marketing expenses 29100 =(6000+2500+1200)*3 Total budgeted marketing expense 29496 b Total budgeted marketing expense 29496 Less: Depreciation expense 7500 =2500*3 Estimated cash payment for marketing expenses 21996

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