Answered Essay: Hello, I need help with calculating Marketing, Sales and Commissions expense for each month of 3d

Hello, I need help with calculating Marketing, Sales and Commissions expense for each month of 3d quarter. Here is the scenario. The Company ABC has contracted with a media company to handle all marketing materials and advertising. Their budget for the first year is $2,500,000. The company also has contracted with an advertisement sales company that is responsible for booking the advertisements. Their budget for the first year is $2,000,000. The Company ABC has allowed for a 15% commission to be paid to the advertiser in the form of a discount or in some cases paid to their ad agency of record. I need to calculate the Marketing, Sales and Commissions expense for each month for the 3d quarter. I calculated this by $6,957,000/3 months=2,319,000 per month which is incorrect. The amount of $6,957,000 is incorrect. There is a table below with correct numbers other than $6,957,000. Please tell me how the 15% commission was calculated in the table. For example, how the amount of $1,458,000 was calculated? The amount of $6,957,000 is incorrect because the total amount is $23,454,000. The total amount of  $23,454,000 is correct. Thank you!!!

Quarter Markt & Advert. Booking Advert. 15% Commission Total
1st $625,000 $500,000 $1,458,000 $2,583,000
2d $625,000 $500,000 3,645,000 4,777,000
3d $625,000 $500,000 5,832,000 6,957,000
4th $625,000 $500,000 8,019,000 9,144,000
2,500,000 2,000,000 18,954,000 23,454,000

Expert Answer


There is a totalling mistake in 2nd quarter , The total should be 4,770,000 and not 4,777,000 as shown in the question. If we take the correct figure, all the figures are maching and the total is also coming to 23,454,000.

The 15% commission figures are based on some figures, other than that are given in the question.

For eg., the figure for 1st quarter is $1,458,000 . This means it is calculated based on a figure $9,720,000 which is not shown in the question. There should be some more figures which need to be studied for arriving at the 15% commission.

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