Sown below are the totals from period budgets of Terrell corporation for the current year:
Revenue budget $100,000
Materials usage from production budget $15,000
Labor Cost Budget $20,000
Manufacturing overhead budget $20,000
General and Administrative budget $30,000
Capital expenditure budget $20,000
Work in process inventories:
Beginning of year $10,000
End of Year $5,000
Finished Goods inventory:
Beginning of year $15,000
End of Year $10,000
Tax Rate 40%
Required: Prepare a forecasted after tax Income Statement for the current year, be sure to show gross margin (GM), and profit before tax (PBT) and profit after tax (PAT).
Terrell Corporation Budgeted/ Comparative Income Statement |
||
$ | ||
Budgeted Sales Revenue | 100,000 | |
Less : Budgeted Cost of Goods Sold | Note 1. | 65,000 |
Gross Margin | 35,000 | |
Budgeted Selling and Adminitration Expenses | ||
General and Administrative budgeted | 30,000 | |
Budgeted Profit before Tax (PBT) | 5,000 | |
Tax @40% | 15000*40% | 2,000 |
Budgeted Profit after Tax (PAT) | 3,000 |
Working Note
1) Statement of Budgeted Cost of Goods Sold
$ | $ | |
Material used in Production | 15000 | |
Direct Labour Cost | 20000 | |
Manufacturing overhead | 20000 | |
Total Manufacturng Cost | 55000 | |
Add : Beginning Work in Process Inventory | 10000 | |
Less : Ending Work in Process Inventory | (5000) | |
Cost of Goods Manufactured | 60000 | |
Add: Beginning Finished Goods Inventories | 15000 | |
Less :Ending Finished Goods Inventories | (10000) | |
Budgeted Cost of Goods Sold | 65000 |
2. Capital Expenditure are not directly charge to the Income statement , Capital expenditure are the expenditure with future Benefit , and if incurre for purchase of Depreciable assets , then it amortised over the life of assets to Income statement by way of Depreciation . As nothing is Provided in Question relating to life or Depreciation . Assume capital expenditure is for non depreciable assets , hence no treatment will be given in Income Statement for capital Expenditure .
3. Selling and Administrative expenses are the after production expenses , and a Period cost , hence it does not include in Cost of Goods sold , but directly charge to Income Statement as Selling and Adminstrative expenses.
Sown below are the totals from period budgets of Terrell corporation for the current year: Revenue...
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Calculate the:
1. Sales revenue budget
2. Production budget
3. Direct materials usage and purchases budget
4. Direct labour budget
5. Manufacturing overhead budget
6. Ending inventories budget
7. Cost of goods sold budget
8. Support department budget
9. Budgeted income statement
Budgets & Budgetory Controls The management accountant for Wow Wheels, a manufacturer of sports bikes, is in the midst of...
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Road Warrior Corporation began operations early in the current year, building luxury motor homes. During the year, the company started and completed 50 motor homes at a cost of $60,000 per unit. Of these, 48 were sold for $100,000 each and two remain in finished goods inventory. In addition, the company had six partially completed units in its factory at year-end. Total costs for the year (summarized alphabetically) were as follows. Direct materials used $ 800,000 Direct labor 990,000 Income...
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Hamza Corporation reported the following results for the current year: Revenue Beginning inventory, Direct Materials Ending inventory, Direct Materials Purchases - Direct Materials Direct Labor Manufacturing Equipment Depreciation Plant Utilities Indirect Plant Labor Marketing Customer Service Beginning Work-in Process Ending Work-in-Process Beginning Finished Goods Ending Finished Goods $800,000 35,000 20,000 175.000 225,000 90,000 50,000 60,000 30,000 40,000 80,000 85,000 90,000 75,000 Based on the data above, Cost of Goods Sold equals:
Road Warrior Corporation began operations early in the current year, building luxury motor homes. During the year, the company started and completed 50 motor homes at a cost of $60,000 per unit. Of these, 48 were sold for $95,000 each and two remain in finished goods inventory. In addition, the company had six partially completed units in its factory at year-end. Total costs for the year (summarized alphabetically) were as follows: $ 737000 Direct materials used Direct labor General and...
Road Warrior Corporation began operations early in the current year, building luxury motor homes. During the year, the company started and completed 50 motor homes at a cost of $60,000 per unit. Of these, 48 were sold for $95,000 each and two remain in finished goods inventory. In addition, the company had six partially completed units in its factory at year-end. Total costs for the year (summarized alphabetically) were as follows. Direct materials used $ 714,000 Direct labor 812,000 Income...