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).
