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MM Co. predicts sales of $45,000 for May. MM Co. pays a sales manager a monthly salary of $4,100 plus a commission of 6% of sales dollars. MM’s production manager recently found a way to reduce the amount of packaging MM uses. As a result, MM’s product will receive better placement on store shelves and thus May sales are predicted to increase by 7%. In addition, MM’s shipping costs are predicted to decrease from 4% of sales to 2% of sales.
Compute (1) budgeted sales and (2) budgeted selling expenses for May assuming MM switches to this more sustainable packaging.
Please show how to work the problem.

Respuesta :

Option(1) $48,150 and Option(2) $7,952 are the correct answers.

The mentioned data are provided by the scenario:

May sales total $45,000

May sales increased by 7%.

Salary for a sales manager = $4,100

Commission based = 6%

2% for shipping

(1). Budgeted sales for may can thus be calculated as follows:

May sales budget = $45,000 + ($45,000 7%)

= $45,000 + $3,150

= $48,150

(2). Budgeted selling expenditure are as follows:

Sales manager salary + (commission on budget sales) + ( shipping cost on budget sales)

= $4,100 + ( $48,150 × 6%) + ( $48,150 × 2%)

= $4,100 + $2,889 + $963

= $7,952

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