You are the managerial accountant at Reliable Company. You have been assigned to support the marketing department and manage its master budget. The marketing department is responsible for the following:
- Managing the firm's marketing
- Hiring subcontractors
- Selling the consulting expertise to smaller outside firms
The department's expenses are as follows:
- Salaries and benefits of $48,000/month
- Web site operations of $21,000/ month
- Online advertising expenses of $15,000/month
- Miscellaneous expenses of $3,500/month
The sales forecast for its consulting services are as follows:
- April: $190,000
- May: $200,000
- June: $205,000
The department pays a sales commission of 5%, and this is paid in the following month. Subcontractor expenses are estimated at 45% of sales and are paid the month after they are billed. Consulting fees are collected 20% in the month of sale, 70% in the following month, and 10% in the second month following sale.
Refer to the attached schedules.
Develop a master budget for the marketing department.
This task includes the following:
- Completing the attached schedules for a master budget for the marketing department
- Supporting schedules for cash disbursements and collections
Analyze additional needs and resources based on those budgets. Make recommendations based on those budgets.
Respond to the following for this assignment:
- Develop the marketing department's master budget.
- Prepare a schedule of expected cash collections.
- Make recommendations based on those budgets.
Using the schedule template provided, complete the marketing department's master budget and schedule of expected cash collections. In a 4-page report, provide your recommendations to support the marketing master budget. Submit both documents to complete the assignment. Please use APA formatting requirements for the word document.
Schedule:
Budget Data:
| Reliable Company Marketing Department Master Budget | |||
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| Data | April | May | June |
| Budgeted consulting revenues | $ 190,000 | $ 200,000 | $ 205,000 |
| Less: Sales commissions (5% of sales) | $ 9,500 | $ 10,000 | $ 10,250 |
| Less: Cost of sales (45% of sales) | $ 85,500 | $ 90,000 | $ 92,250 |
| Net consulting revenues | $ 95,000 | $ 100,000 | $ 102,500 |
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| Accounts Receivable Collections |
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| Month of sale | 20% |
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| Month following sale | 70% |
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| Second month following sale | 10% |
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| Monthly Budgeted Expenses |
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| Salaries and benefits | $ 48,000 |
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| Web site operations | $ 21,000 |
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| Online advertising expenses | $ 15,000 |
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| Other misc. expenses | $ 3,500 |
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| Accounts Payable Payments |
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| Month of sale | 40% |
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| Month following sale | 60% |
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| Accounts Payable |
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| Online advertising expenses | $ 15,000 |
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