Answer:
<h2>SPU, Ltd.</h2>
<h3>Sales Expense</h3>
Report for January Sales Expense Budget
Item Amount Amount
Sales commissions $370,500 $380,133
Sales staff salaries 92,400 92,096
Telephone and mailing 43,000 52,942
Building lease payment 60,000 60,000
Utilities 17,100 17,442
Packaging and delivery 82,000 93,480
Depreciation 36,750 37,225
Marketing consultants 52,190 64,500
Total Sales Expenses $753,940 $797,818
Explanation:
1. Sales volume is expected to increase by 14 percent.
2. Sales prices are expected to decrease by 10 percent.
3. Commissions are based on a percentage of sales revenue.
Sales Commissions = $380,133 ($370,500 x 1.14 x 0.9)
4. Sales staff salaries will increase 4 percent next year regardless of sales volume.
Sales staff salaries = $96,096 ($92,400 x 1.04)
5. Building rent is based on a five-year lease that expires in three years.
6. Telephone and mailing expenses are scheduled to increase by 8 percent even with no change in sales volume. However, these costs are variable with the number of units sold, as are packaging and delivery costs.
Telephone and mailing = $52,942 ($43,000 x 1.08 x 1.14)
Package and delivery = $93,480 ($82,000 x 1.14)
7. Utilities costs are scheduled to increase by 2 percent regardless of sales volume.
Utilities = $17,442 ($17,100 x 1.02)
8. Depreciation includes furniture and fixtures used by the sales staff. The company has just acquired an additional $57,000 in furniture that will be received at the start of next year and will be depreciated over a 10-year life using the straight-line method.
Previous depreciation = $36,750
Current year's addition 475 ($57,000/10 years/12 months)
Total for the month $37,225
9. Marketing consultant expenses were for a special advertising campaign that runs from time to time. During the coming year, these costs are expected to average $64,500 per month.
