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.
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.
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