a new two contract for the building was signed with a 10.00% increase from the prior year | |||||
insurance expenses will hold steady due to contract agreement | |||||
travel/entertainment will be reduced by 7.00% from prior year | |||||
new equipment was purchased in the current year causing a 22.00% increase in depreciation | |||||
30% of the payroll cost will increase/decrease based upon the trend; 70% of the payroll will increase by 25.00% | |||||
due to anticipated new hires causing contract labor to decrease by 30.00% | |||||
all the new hires will cause training expenses to increase by 11.00% |
2014 | 2015 | 2016 | |
Sales Revenue | 9,800,000 | 10,780,000 | 12,397,000 |
Cost of Goods Sold | 6,018,000 | 6,318,900 | 6,950,790 |
Gross Margin | 3,782,000 | 4,461,100 | 5,446,210 |
Operating Expenses | |||
Payroll Expenses | 1,336,000 | 1,362,720 | 1,417,229 |
Building Expenses | 284,800 | 284,800 | 284,800 |
Office Expenses | 355,200 | 337,440 | 303,696 |
Advertising Expenses | 844,800 | 1,056,000 | 1,320,000 |
Insurance Expenses | 299,200 | 299,200 | 299,200 |
Contract Labor Expenses | 149,600 | 127,160 | 95,370 |
Travel/Entertainment Expenses | 89,500 | 90,395 | 91,299 |
Training Expenses | 44,000 | 41,800 | 39,710 |
Service Charges Expenses | 13,000 | 13,000 | 13,650 |
Dues/Licenses Expenses | 9,800 | 9,800 | 9,800 |
Depreciation Expenses | 52,450 | 49,828 | 47,336 |
Total Operating Expenses | 3,478,350 | 3,672,143 | 3,922,090 |
Net Income | 303,650 | 788,958 | 1,524,120 |
Based upon the assumptions listed above and using trend analysis for the | |||
remainder of the accounts, create a budget for 2017. |
Budgeted Income statement | |
For the year 2017 | |
Sales Revenue | 13636700 |
Cost of goods sold | 7298330 |
Gross Margin | 6338370 |
Operating Expenses: | |
Payroll Expense | 1690753 |
Building Expenses | 284800 |
Office Expenses | 349250 |
Advertising Expenses | 1650000 |
Insurance Expenses | 299200 |
Contract Labor Expenses | 66759 |
Travel/Entertainment Expenses | 84908 |
Training Expenses | 44078 |
Service Charges Expenses | 13650 |
Dues/Licenses Expenses | 9800 |
Depreciation Expenses | 57750 |
Total Operating Expenses | 4550948 |
Net Income | 1787422 |
Calculations:
Sales Revenue =12,397,000+10% | 13636700 |
Insurance Expenses | 299200 |
Travel/Entertainment Expenses = 91299-7% | 84908 |
Depreciation = 47336+22% | 57750 |
Payroll cost: | ||
Trend | [(1362720-1336000)/1336000]x100 = 2% | (1417229-1362720)/1362720 = 4% |
For 30% | (1417229)x30%+6% | 450678 |
For 70% | (1417229x70%)+25% | 1240075 |
Total | 1690753 |
Contract labor = 95,370 - 30%(95,370) | 66759 |
Training Expense = 39,710 + 11% | 44078 |
2014 | 2015 | 2016 | 2017 | |
Sales | 9800000 | 10780000 | 12397000 | 13636700 |
Difference | 980000 | 1617000 | 1239700 | |
Trend | 10% | 15% | 10% | |
Cost of goods sold | 6018000 | 6318900 | 6950790 | 7298330 |
Difference | 300900 | 631890 | 347540 | |
Trend | 5% | 10% | 5% |
Office Expenses | 355200 | 337440 | 303696 | 349250 |
Difference | 17760 | 33744 | 45554 | |
Trend | 5% | 10% | 15% |
a new two contract for the building was signed with a 10.00% increase from the prior...