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 3,400; sales volume for the fourth quarter is expected to increase by 10%. Variable marketing expense per unit sold amount to approximately $0.15, paid in cash in month of sale. Fixed marketing expense per month amount to $8,500 of salaries, $3,750 of depreciation (delivery trucks), and $1,700 of insurance (paid 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?

Answer 1

a)

Marketing Budget for 4th Quarter
Item	Amount	Remarks
Variable Marketing Expenditure	$561.00	(3400+(3400x10%) x $.15
Fixed Marketing Expense	$25,500.00	8500 x 3
Depreciation	$11,250.00	3750 x 3
Insurance of trucks	$5,100.00	1700 x 3
Total Marketing Expense	$42,411.00

b)

Assumed all expenses paid in the same month itself

Cash Payment for Marketing Budget for 4th Quarter
Item	Amount	Remarks
Variable Marketing Expenditure	$561.00	(3400+(3400x10%) x $.15
Fixed Marketing Expense	$25,500.00	8500 x 3
Insurance of trucks	$5,100.00	1700 x 3
Total Cash Payment	$31,161.00