33) Hi-value Products Company is creating an operating budget for the 3rd quarter, and is now preparing the operating expense budget. Assumptions for operating expenses are as follows:
Miscellaneous expense — variable portion: 10% of sales revenue
Miscellaneous expense — fixed portion: $4,200 per month
Salary expense — fixed: $12,000 per month
Rent expense — fixed: $8,000 per month
Depreciation expense — fixed: $5,600 per month
Sales for July, August and September were budgeted at $100.000, $120,000, and $160,000.
Using the format below, please prepare an operating expense budget.
Operating Expenses Budget
|
Jul
|
Aug
|
Sep
|
Variable operating expenses:
|
|
|
|
Misc. expense (10% of sales)
|
|
|
|
Total variable expenses
|
|
|
|
Fixed operating expenses:
|
|
|
|
Salary expense
|
|
|
|
Rent expense
|
|
|
|
Depreciation expense
|
|
|
|
Misc. expense (fixed portion)
|
|
|
|
Total fixed expenses
|
|
|
|
Total operating expenses
|
|
|
|
34) Hi-value Products Company is creating an operating budget for the 3rd quarter. Please review the following budgets:
Sales Budget
|
Jul
|
Aug
|
Sep
|
Cash sales: 75%
|
$75,000
|
$90,000
|
$120,000
|
Credit sales: 25%
|
25,000
|
30,000
|
40,000
|
Total sales
|
$100,000
|
$120,000
|
$160,000
|
|
|
|
|
Inventory, Purchases and COGS. Budget
|
Jul
|
Aug
|
Sep
|
Cost of goods sold
|
$60,000
|
$72,000
|
$96,000
|
Desired ending inventory
|
38,000
|
50,000
|
62,000
|
Total inventory required
|
98,000
|
122,000
|
158,000
|
less Beginning inventory
|
(50,000)
|
(38,000)
|
(50,000)
|
Purchases
|
$48,000
|
$84,000
|
$108,000
|
Operating Expenses Budget
|
Jul
|
Aug
|
Sep
|
Variable operating expenses:
|
|
|
|
Misc. expense (10% of sales)
|
$10,000
|
$12,000
|
$16,000
|
Total variable expenses
|
10,000
|
12,000
|
16,000
|
Fixed operating expenses:
|
|
|
|
Salary expense
|
12,000
|
12,000
|
12,000
|
Rent expense
|
8,000
|
8,000
|
8,000
|
Depreciation expense
|
5,600
|
5,600
|
5,600
|
Misc. expense (fixed portion)
|
4,200
|
4,200
|
4,200
|
Total fixed expenses
|
29,800
|
29,800
|
29,800
|
Total operating expenses
|
$39,800
|
$41,800
|
$45,800
|
Using the format below, please prepare a budgeted income statement.
Budgeted Income Statement
|
Jul
|
Aug
|
Sep
|
Sales revenue
|
|
|
|
Cost of goods sold
|
|
|
|
Gross profit
|
|
|
|
Variable operating expenses:
|
|
|
|
Misc. expense
|
|
|
|
Total variable expenses
|
|
|
|
Contribution margin
|
|
|
|
Fixed operating expenses
|
|
|
|
Salary expense
|
|
|
|
Rent expense
|
|
|
|
Depreciation expense
|
|
|
|
Misc. expense (fixed portion)
|
|
|
|
Total fixed expenses
|
|
|
|
Operating income/(loss)
|
|
|
|
Interest expense
|
|
|
|
Net income/(loss)
|
|
|
|