Advertising Budget Worksheet Name: ______
1. Write the following decimals as percents.
1.37 = _____ 0.05 = _____ 0.0005 = _____ 0.2 = _____
0.007 = _____ 1.00 = _____ 6.5 = _____ 0.0025 = _____
2. Write the following percents as decimals.
0.6% = _____ 25% = _____ 3.5% = _____ 3% = _____
250% = _____ 0.15% = _____ 0.007% = _____ 7.35% = _____
3. Finding what percent one number is of another.
· What percent of 75 is 40? _____
· What percent of 320 is 85? _____
· 35 is what percent of 98? _____
· 17 is what percent of 67? _____
4. Finding the original number when a percent of it is known.
· 15% of what number is 30? _____
· 50% of what number is 125? _____
· 5% of what number is 25? _____
· 98% of what number is 78? _____
5. Percent change
· The price of a car changed from $7500 to $9800. What is the percent increase? _____
· The price of a computer changed from $1500 to $850. What is the percent decrease? _____
6. Arithmetic Mean or Average
· Find the mean of 113, 78, 145, 98, 220, and 76 _____
· Find the average cost for the following sweaters $25, $35, $55, $27, $89, $48, $133, and $79. _____
7. Advertising budgeting methods
· Last year’s sales were $11,600,000 and are projected to increase by 4% for next year. Last year’s expenses were 41% of last year’s sales and are projected to decrease by 2% for next year. Last year the business earned a profit of $4,117,600. Profit is expected to increase by 3% over last year’s figures. Plug in last years figures to see how much the company spent on advertising last year.
Sales (for the year)
Expenses
Profit Amount spent on advertising
· Based on the last year’s figures and the projected changes in sales, expenses and profit, calculated forecasted sales, expenses and profits for the upcoming year. Calculate the amount left to spend on advertising.
Forecasted sales Forecasted expenses
Forecasted profit expectation
Amount left to spend on advertising
8. A business has yearly sales of $1,800,000. The industry average is to spend 6 percent of gross sales on advertising. The company has expenses of $1,200,000 and wants to maintain a profit margin of 30 percent of sales.
a. If this business uses the affordable budget method, what would it establish as its advertising budget? _____
b. Assume the business wants to spend 3.5% of its sales for advertising. If the business uses the percent of sales method, what would it establish as its advertising budget? _____
9. J & J Supply’s promotional budget is based on 4% of last year’s sales. Determine this year’s budget based on last year’s sales of $1,000,000. _____
10. The Kriss Camera Shop’s promotional budget is based on 3% of anticipated sales for the coming year. Determine this year’s promotional budget based on anticipated sales of $700,450. _____
11. Using the advertising based on objectives approach, calculate the total of estimated sales, the total planned to be spent on advertising, and the percentage of sales for each of the special advertising events and for the total sales for the following business.
Month / Sales Goal / Sales Event / Advertising Cost / % of SalesApril / $12,500 / Spring Fling Sale / $750.00
June / $112,700 / Summer Clearance Sale / $6,198.50
Nov-Dec / $246,750 / Holiday Bazaar Sale / $9,870.00
Totals / xxxxxxxx
On a piece of graph paper graph the sales goals and percent of sales for the above situation.
12. Smith’s Department Store needs to decide which advertising budgeting method to use. The following information is needed to calculate Smith’s advertising budget using all three methods.
· Affordable Budget Method
Last year’s sales were $9,815,000 and are projected to increase by 4.5% for next year. Last year’s expenses were 41% of last year’s sales and are projected to decrease by 1.5% for next year. Last year the business earned a profit of $4,587,600. Profit is expected to increase by 2% over last year’s figures. Based on the last year’s figures and the projected changes in sales, expenses and profit, calculated forecasted sales, expenses and profits for the upcoming year. Calculate the amount left to spend on advertising.
Forecasted sales Forecasted expenses
Forecasted profit expectation
Amount left to spend on advertising
· Percentage of Sales Method
The following are the percentage of sales figures other department stores in the country use to determine advertising budgets. Calculate the mean or average for the industry: 5%, 7.5%, 4%, 11%, 9.75%, 10%, and 8%. The average or mean for the industry is _____
Based on the industry mean/average, and using the forecasted sales for Smith’s in the affordable budget method from above, what is the amount Smith’s should use for its advertising budget? _____
· Budget Based on Objectives Method
Below are the activities on which Smith’s Department Store will base its budget for the entire year.
Month / Sales Goal / Sales Event / Advertising Cost / % of SalesJanuary / $256,417 / Winter Clearance / $8,975
February / $299,153 / Valentines & Presidents Days / $14,958
March-April / $598,306 / Easter, Spring Fling / $50,856
May-June / $683,778 / Summer Days / $30,770
July / $854,723 / July 4th and Clearance / $66,241
August / $923,850 / Back to School / $64,670
September –October / $1,500,730 / Fall Fashions / $127,562
November-December / $3,750,000 / Winter Sale / $337,500
December / $1,389,718 / General Christmas Sale / $90,332
Totals / XXXXX
Graph the total advertising costs and percent of sales figures for each method. Write a brief statement of the differences you notice between all three methods.
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