Budgets in Managerial Accounting: Matthew Gabon, the sales manager of Office Furniture Solutions, prepared the following budget for 2008:
Salaries (fixed) $500,000
Commissions (variable) 180,000
Advertising (fixed) 100,000
Charge for office space 2,000
Office supplies & forms (variable) 2,400
After he submitted his budget, the president of office furniture solutions reviewed it and recommended that advertising 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. Assume cost of goods sold is 60% of Sales.
Matthew's 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 Matthew's budget is his share (based on relative square feet)of the company's total cost of rent, utilities, and janitorial costs for the administrative office building.
Prepare a revised budget consistent with the president's recommendation
The solution prepares revised budget for Office Furniture Solutions based on manager recommendations.