A-Design Inc., a federally incorporated company in Canada, specialized in the design and manufacturing of armrests for the wheelchair industry plans to produce and sell 15,000 armrests at $50 per unit in its third year of operation, to spend $20,000 for marketing campaigns, $100,000 for electricity consumption, $240,000 for salaries, $300,000 for production materials, $20,000 for overhead, $24,000 for rent and $10,000 for depreciation cost. A-Design has a debt of $100,000 at an annual simple interest rate of 5% and a 25% income tax rate. 2. Produce A-Design’s income statement at the end of their third year and determine the operating income, earnings before taxes and net income
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
A-Design Inc., a federally incorporated company in Canada,
specialized in the design and manufacturing of armrests for
the wheelchair industry plans to produce and sell 15,000
armrests at $50 per unit in its third year of operation, to
spend $20,000 for marketing campaigns, $100,000 for
electricity consumption, $240,000 for salaries, $300,000 for
production materials, $20,000 for overhead, $24,000 for rent
and $10,000 for depreciation cost. A-Design has a debt of
$100,000 at an annual simple interest rate of 5% and a 25%
income tax rate.
2. Produce A-Design’s income statement at the end of their third year
and determine the operating income, earnings before taxes and net
income
Step by step
Solved in 4 steps with 2 images
