Marketing Education Pt. 4

Marketing Education Part 4

Advertising Budget and the Bottom Line: Managerial Accounting Analysis[1]

 

Quarter

 

Contribution per Case

 

Volume

 

Share Change

 

Net New Sales

 

Advertising Change

Autumn ‘83 $4.50 22.0M 0.002 $198,000 -$1,040,000
Winter ‘83   4.50 25.3M   0.0035   398,475 +     178,000
Spring ‘83   4.50 22.0M 0.005   495,000 –        10,000
Summer ‘83   4.50 18.7M 0.006   504,900 –        40,000
 

TOTAL

 

$1,596,375

 

-$912,000

 

Contribution to Fixed Costs and Profit

 

+$684,375

Annual

Advertising budget payout rate is                    $1,596,375

Change minus expense divided by change     –    912,000

912,000

=      $0.684M   = .75

0.912M

 

It is imperative to note that the breakeven of this

budget will come midway through the third quarter.

 

First three quarter

Advertising budget payout rate is            $1,091,475

Change minus expense divided by change             –    872,000

872,000

=      $0.219M   = .25

0.872M

[1] These calculations do not consider inflation or unforeseeable expenses. All data are from fiscal ’81 (expenses) and fiscal ’83 (predictions).

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