\"Matthew Gabon, the sales manager of Office Furniture Solutions, prepared the f
ID: 2663547 • Letter: #
Question
"Matthew Gabon, the sales manager of Office Furniture Solutions, prepared the following budget for 2008:Sales Department
Budgeted Cost, 2008
(Assuming Sales of $12,000,000)
Salaries (fixed) $500,000
Commissions (variable) $180,000
Advertising (fixed) $100,000
Charge for office space (fixed) $2,000
Office supplies & gorms (variable) $2,400
Total $784,4000
After he submitted his budget, the president of Office Furniture Solutions reviewed it and recommended that advertsing be increased to $120,000. Further, she wanted Matthew to assume a sales level of $13,000,000. This level of sales is to be achieved without adding to the sales force.
Matthew sales group occupies approximately 250 square feet of office space out of total administrative office space of 20,000 square feet. The $2,000 space charge in Matthews's budget is his share(allocated based on relative square feet) of the company's total cost of rent, utilities, and janitorial cost for the administrative office building.
Required
pepare a revised budget consistent witht eh president's recommendation."
Explanation / Answer
President recomended budget fot 2008 is as floows.. Budegeting As per president Actual recomandation 2008 2008 sales 12000000 13000000 variable cost: commission 180000 195000 contribution 11820000 12805000 Fixed cost: salries 500000 500000 charge for office space 2400 240 Advertising 100000 120000 Profit 11217600 12184760 Here space has calicualted : for 20000 square feet -----paid $2000 Relevent space 250 sqf =[250/20000] * 2000 = 240 and variable cost of commission calicualted as follwos.. 12000000 sale......180000 for 13000000 .../ = [13000000 /12000000] * 1800000 = $195000 Budegeting As per president Actual recomandation 2008 2008 sales 12000000 13000000 variable cost: commission 180000 195000 contribution 11820000 12805000 Fixed cost: salries 500000 500000 charge for office space 2400 240 Advertising 100000 120000 Profit 11217600 12184760Related Questions
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