Example of Advertizing Expense - Note 3

NOTE 3 - ADVERTISING EXPENSE

The Company's advertising budget has been established as follows:

  YEAR 1 YEAR 2 YEAR 3
Newspaper Advertising $ 90,000 $105,000 $120,000
Magazine Advertising $ 30,000 $ 35,000 $ 40,000
Radio Promotions $ 10,000 $ 10,000 $ 10,000
Total Advertising Budget $130,000 $150,000 $170,000
Advertising Budget as a Percentage of Sales 22.45% 22.47% 21.67%

 

In year one, J&B plans to spend $5,000 during the two month testing phase (April and May). Upon completing the testing phase, the company has budgeted $12,000 each month for the remaining ten months. As a result, the company plans to spend a total of $130,000 in advertising during the first year of operation. In year two and three the company has budgeted $150,000 and $170,000 for its advertising campaign. These funds will be disbursed on an equal bases over a twelve month period.