Question:

Office Furniture Solutions Budget for 2008: Prepare a revised budget

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

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 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.

Required

Prepare a revised budget consistent with the president's recommendation