Budgets in Accounting

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 of office space (fixed) $ 2,000
Office supplies &forms (variable) $ 2,400
Total $784,400

After he submitted his budget, the president of Office Furniture Solutions reviewed it and recommended that advertising be increased to $120,000. Further, she wantedMatthew to assume a sales level of $13,000,000. This level of sales is to be achieved without adding to the sales force. Matthew’s sales group occupies approximately250 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 (allocatedbased 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.


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