PROBLEM 7-E BUDGETED OPERATING INCOMEJanniel Inc. is preparing its budget for 2016. Income statement for 2015 is presentedbelow:Sales (100,000 units)EDIP1,000,000Cost of sales600,000Gross ProfitP400,000Operating expenses240,000Operating IncomeP160,000Operating expenses includes depreciation of P40,000. For the year 2016, the company plans toincrease selling price by 10% which is expected to decrease sales volume in units by 5%. Thecost of sales as a percent of sales will increase to 62%. Other than depreciation, all operatingcosts are variable.Required:What is the budgeted income for 2016?

Operating income is the net income generated by the firms. It is calculated by deducing all the…

Answered: What is the budgeted income for 2016?

Business

Finance

What is the budgeted income for 2016?

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter7: The Master Budget And Flexible Budgeting

Section: Chapter Questions

Problem 5P: Selling and administrative expense budget and budgeted income statement Budgeted selling and...

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Budgeted selling and administrative expenses for King Tire Co. In P7-2 for the year ended December 31, 2016, were as follows: Required: 1. Prepare a selling and administrative expense budget, in good form, for the year 2016. 2. Using the information above and the budgets prepared in P7-2, prepare a budgeted income statement for the year 2016, assuming an income tax rate of 40%.
CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2016 and 2017. May 2016 180,000 June 180,000 July 360,000 August 540,000 September 720,000 October 360,000 November 360,000 December 90,000 January 2017 180,000 Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale. 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials: May 2016 90,000 June 90,000 July 126,000 August 882,000 September 306,000 October 234,000 November 162,000 December 90,000 General and administrative salaries are approximately 27,000 a month. Lease payments under long-term leases are 9,000 a month. Depredation charges are 36,000 a month. Miscellaneous expenses are 2,700 a month. Income tax payments of 63,000 are due in September and December. A progress payment of 180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be 132,000, and a minimum cash balance of 90,000 should be maintained throughout the cash budget period. a. Prepare a monthly cash budget for the last 6 months of 2016. b. Prepare monthly estimates of the required financing or excess fundsthat is, the amount of money Bowers will need to borrow or will have available to invest. c. Now suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 1/30 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects. d. Bowers sales are seasonal; and her company produces on a seasonal basis, just ahead of sales. Without making any calculations, discuss how the companys current and debt ratios would vary during the year if ail financial requirements were met with short-term bank loans. Could changes in these ratios affect the firms ability to obtain bank credit? Explain.
CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2015 and 2016: May 2015 180,000 June 180,000 July 360,000 August 540,000 September 720,000 October 360,000 November 360,000 December 90,000 January 2016 180,000 Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials: May 2015 90,000 June 90,000 July 126,000 August 882,000 September 306,000 October 234,000 November 162,000 December 90,000 General and administrative salaries are approximately 27,000 a month. Lease payments under long-term leases are 9,000 a month. Depreciation charges are 36,000 a month. Miscellaneous expenses are 2,700 a month. Income tax payments of 63,000 are due in September and December. A progress payment of 180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be 132,000, and a minimum cash balance of 90,000 should be maintained throughout the cash budget period. a. Prepare a monthly cash budget for the last 6 months of 2015. b. Prepare monthly estimates of the required financing or excess fundsthat is, the amount of money Bowers will need to borrow or will have available to invest. c. Now suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 1 30 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects. d. Bowers sales are seasonal; and her company produces on a seasonal basis, just ahead of sales. Without making any calculations, discuss how the companys current and debt ratios would vary during the year if all financial requirements were met with short-term bank loans. Could changes in these ratios affect the firms ability to obtain bank credit? Explain.
CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2014 and 2015: May 2014 180,000 June 180,000 July 360,000 August 540,000 September 720,000 October 360.000 November 360,000 December 90,000 January 2015 180.000 Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials: May 2014 90,000 June 90,000 July 126,000 August 882.000 September 306,000 October 234,000 November 162,000 December 90,000 General and administrative salaries are approximately 27,000 a month. Lease payments under long-term leases are 9,000 a month. Depreciation charges are 36,000 a month. Miscellaneous expenses arc S2,700 a month. Income tax payments of 63,000 arc due in September and December. A progress payment of 180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be 132,000, and a minimum cash balance of 90,000 should be maintained throughout the cash budget period. a. Prepare a monthly cash budget for the last 6 months of 2014. b. Prepare monthly estimates of the required financing or excess funds that is, the amount of money Bowers will need to borrow or will have available to invest. c. Now suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 130 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects. d. Bowers sales are seasonal; and her company produces on a seasonal basis, just ahead of sales. Without making any calculations, discuss how the companys current and debt ratios would vary during the year if all financial requirements were met with short-term bank loans. Could changes in these ratios affect the firms ability to obtain bank credit? Explain.
Selling and administrative expense budget and budgeted income statement Budgeted selling and administrative expenses for Scottsdale Styles Inc. in P7-4 for the year ended December 31, 2016, were as follows: Required: 1. Prepare a selling and administrative expenses budget, in good form, for the year 2016. 2. Using the information above and the budgets prepared in P7-4, prepare a budgeted income statement for the year 2016, assuming an income tax rate of 30%.
Current Attempt in Progress Kirkland Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first 6 months of 2020, the following data are available. 1. 2. 3. 4. Sales: 20,200 units quarter 1: 22,200 units quarter 2. Variable costs per dollar of sales: sales commissions 5%, delivery expense 2%, and advertising 3% Fixed costs per quarter: sales salaries $10,600, office salaries $6,370, depreciation $4,580, insurance $1.630, utilities $840, and repairs expense $650. Unit selling price: $24. Prepare a selling and administrative expense budget by quarters for the first 6 months of 2020. (List variable expenses before fixed expense.) D
PROBLEM 7-E BUDGETED OPERATING INCOME Janniel Inc. is preparing budget for 2016. Income statement for 2015 is presented below: LOUIS Sales (100,000 units P1,000,00 600,000 P400,000 240,000 Operating expenses Operating Income P160,000 Operating expenses includes depreciation of P40,000. For the year 2016, the company plans to increase selling price by 10% which is expected to decrease sales volume in units by 5%. The cost of sales as a percent of sales will increase to 62%. Other than depreciation, all operating costs are variable. Required: What is the budgeted income for 2016? ENT ATVERSITY SAPIE IFICAT
Current Attempt in Progress Monty Company combines its operating expenses for budget purposes in a selling and administrative expense budget For the first quarter of 2022, the following data are developed L Sales: 21,500 units unit selling price 2 Variable costs per sales dollar Sales commissions Delivery expense 3 Advertising Fixed costs per quarter Sales salaries Office salaries Depreciation Insurance Utilities $30 Save for Later 6% 4% $24,400 19,500 5,000 2,100 1,000 Prepare a selling and administrative expense budget for the first quarter of 2022 (List variable costs before fixed costs) MONTYCOMPANY Selling and Administrative Expense Budget
QUESTION 1You are required to prepare a cash budget for the third quarter of 2020 for STS Corporation.Month Total sales(RM)March 170,000April 100,000May 140,000June 180,000July 200,000AugustSeptemberOctober220,000195,000180,000i) The company makes 10 percent cash sales, and the balance are collected as follows; 60percent is collected one month after sales, 30 percent is collected two months after sales,and 10 percent is collected three months after sales.ii) Purchase of raw materials is 50 percent of sales and are made one month prior to sales.Payment are made equally in the two months after the purchases.iii) Wages and salaries amounting to 10 percent of the last month’s sales. The company fixedmonthly expenses are RM3,000 for rent, RM2,000 for utilities, RM10,000 for depreciation,and RM1,500 for insurance.iv) A quarterly dividend of RM50,000 will be paid at the end of each quarter.v) The company plans to pay RM70,500 in cash for a new machinery installed in August.vi) Ending cash…
Question 3 (Cash budget) The following budgeted statement of profit or loss has been prepared for Kanda Ltd for the four months January to April 2017: January February March April Ghe Ghe Ghe Ghe Sales 70,000 85,000 60,000 63,000 Cost of sales 45,000 57,500 52,500 45,000 Gross profit Administration and selling overhead 18,000 (12,000) 25,000 27,500 (17,500) 17,500 (10,000) (10,500) Net profit before interest 15,000 10,000 7.000 6,000 a. 50% of the cost of sales relates to material purchases for the month. Materials are paid for one month after purchase. Material cost payable as at 1st January 2017 is GH¢30,000 b. 30% of the cost of sales relates to direct labour which is paid for when incurred. c. The remainder of the cost of sales is production overhead (Fixed and Variable). d. Gh¢6,000 per month is a fixed overhead cost which includes Gh¢2,000 depreciation. Fixed production overhead costs are paid for when incurred. e. The remaining overhead is variable. The variable production…
BUDGETED BALANCE SHEET The following information are made available by Racquel and Associates: 1. The company desires to have a cash balance of P30,000 at the end of December 31, 2014 2. The 2014 sales budget is P750,000. AlIl sales are on account and accounts receivable at December 31, 2104 are expected to be 10% of annual sales. 3. The budgeted cost of goods sold for 2014 is P210,000 and ending merchandise inventory is P21,000. The accounts payable is budgeted at 25% of the ending merchandise inventory. 4. The December 31, 2013 balance sheet includes the following balances: Equipment Accumulated depreciation P 130,000 55,000 68,000 Common stock Retained earnings 25,000 5. The budgeted income statement for 2014 includes the following: P 11,300 Depreciation on equipment Income tax payable 21,000 Net income 70,450 6. The income taxes will not be paid until 2015 7. In 2014, management does not expect to purchase additional equipment or to declare any dividends. It does not expect to pay…
Exercises 1: Questions for discussion 1. Describe the items reflected in the sales budget. 2. List the items included in the production budget 3. Identify the items that comprise the operating budget Exercises 2: Word Problems Roel Trading Company presents the actual sales for the first three months of year 2019 in its own products as follows: Product B P 540,000 P 567,000 P 595,350 Product A Total Sales Janaury February March P 880,000 P 941,000 P 1,006,750 The business expects that the trends for the past three months will P 340,000 P 374,000 P 411400 continue in April and May 2019. Required: Determined the projected sales for April and May 2019 for the two products. Round the amounts to thousand pesos.