A company is formulating its marketing expense budget for the last quarter of the year. Sales in units for the third quarter amounted to 2,400; sales volume for the fourth quarter is expected to increase by 10%. Variable marketing expenses per unit sold amount to approximately $0.15, paid in cash in month of sale. Fixed marketing expenses per month amount to $6,000 of salaries, $2,500 of depreciation (delivery trucks), and $1,200 of insurance (paid monthly).a. What is the total budgeted marketing expense for the fourth quarter of the year?b. What is the estimated cash payment for marketing expenses for the fourth quarter?

a. $29,496

b. $21,996

Explanation:

a. The Computation of budgeted marketing expense for the fourth quarter is shown below:-

Sales units                                                            2,640

(2400 × 110%)

Variable marketing expenses per unit sold$0.15

Total Variable marketing expenses                 $396

Fixed Marketing expenses                                    $18,000

Salaries ($6,000 × 3)

Depreciation ($2,500 × 3)                                      $7,500

Insurance ($1,200 × 3)                                            $3,600

Total Fixed marketing expenses                            $29,100

Budgeted marketing expense

for the fourth quarter                                           $29,496

b. Estimated cash payment for marketing expenses for the fourth quarter = Budgeted marketing expense for the fourth quarter - Depreciation

= $29,496 - $$7500

= $21,996

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