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 3,600, sales volume for the fourth quarter is expected to increase by 10%. Variable marketing expense per unit sold amount to approximately $0.20, pald In cash In month of sale. Fixed marketing expense per month amount to $9,000 of salarles, $4,000 of depreciation (delivery trucks), and $1,800 of Insurance (pald monthly). a. What is the total budgeted marketing expense for the fourth quarter of the year? b. What is the estimated cash payment for marketing expense for the fourth quarter? Total budgeted marketing expense Estimated cash payment b.

Answer 1

Marketing Expense

a.

Total budgeted marketing expense = Variable Marketing Expense + Fixed Marketing Expense
= 3,600 X 110% X 0.2 + (9,000 + 4,000 + 1,800) = $ 15,592

b.

Estimated cash payment = Total expense - Depreciation = 15,592 - 1,800 = $ 13,792

Tyson Company

Credit Sales	$       100,000	$       120,000	$       110,000
	Estimated Bad Debts Expense
Assumed rate of B/D expense	January	February	March
1%	$           1,000	$           1,200	$           1,100
3%	$           3,000	$           3,600	$           3,300
5%	$           5,000	$           6,000	$           5,500
8%	$           8,000	$           9,600	$           8,800

Formula version

Credit Sales	100000	120000	110000
	Estimated Bad Debts Expense
Assumed rate of B/D expense	January	February	March
0.01	=100000*B5	=120000*B5	=110000*B5
0.03	=100000*B6	=120000*B6	=110000*B6
0.05	=100000*B7	=120000*B7	=110000*B7
0.08	=100000*B8	=120000*B8	=110000*B8