Question

In 2020, the marketing department of freda's fashions had two employees. one prepared advertising copy, and her salary (including employer's contributions) cost the company s60,000; the other organized shows and events, and her salary (including employer's contributions) cost the company $75,000. in addition to the above, the company spent $400,000 on advertising on late-night television and $400,000 on shows and events. in 2021, the company plans to maintain the same amount of advertising and double the number of shows and events (the existing employee can handle this extra workload). in addition, salaries will rise by 10%, and all other costs are expected to go up by 5%.

required: prepare a budget for 2021 for the marketing department.

Answer 1

To prepare a budget for the marketing department in 2021, calculate the total costs in 2020 and consider the changes for 2021. The total budget for the marketing department in 2021 will be $994,250.

Step-by-step explanation:

To prepare a budget for the marketing department in 2021, we need to consider the existing costs and the changes that will occur. First, let's calculate the total costs in 2020:

• Salary for the employee preparing advertising copy: $60,000
• Salary for the employee organizing shows and events: $75,000
• Advertising on late-night television: $400,000
• Shows and events: $400,000

The total costs in 2020 are $60,000 + $75,000 + $400,000 + $400,000 = $935,000.

In 2021, the company plans to maintain the same amount of advertising ($400,000) and double the number of shows and events. Since the existing employee can handle this extra workload, there won't be any additional cost for shows and events. However, salaries will rise by 10% and all other costs will increase by 5%.

Let's calculate the budget for 2021:

• Salary for the employee preparing advertising copy: $60,000 + ($60,000 * 0.1) = $66,000
• Salary for the employee organizing shows and events: $75,000 + ($75,000 * 0.1) = $82,500
• Advertising on late-night television: $400,000
• Shows and events: $400,000
• Other costs: $935,000 * 0.05 = $46,750

The total budget for the marketing department in 2021 will be $66,000 + $82,500 + $400,000 + $400,000 + $46,750 = $994,250.