Norman Jelen, the controller of Wing Corporation, is trying to prepare a sales b
ID: 2348901 • Letter: N
Question
Norman Jelen, the controller of Wing Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow.1st 2nd 3rd 4th total
Sales revenue $ 170,000 $ 200,000 $ 210,000 $ 260,000 $ 840,000
Cost of Goods sold 102,000 120,000 126,000 156,000 504,000
Gross Profit 68,000 80,000 84,000 104,000 336,000
Selling & Admin exp. 17,000 20,000 21,000 26,000 84,000
Net Income 51,000 60,000 63,000 78,000 252,000
Historically, cost of goods sold is about 60 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue. Sam Wing, the chief executive officer, told Mr. Jelen that he expected sales next year to be 10 percent for each respective quarter above last year
Explanation / Answer
a. Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Wing’s estimate. Net Income Statement 1st 2nd 3rd 4th Total Sales Revenue 187000 220000 231000 286000 924000 Cost of good sold 112200 132000 138600 171600 554400 Gross Profit 74800 88000 92400 114400 369600 Selling and Administrative expens 18700 22000 23100 28600 92400 Net Income 56100 66000 69300 85800 277200 b. Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Sullivan’s estimate Net Income Statement 1st 2nd 3rd 4th Total Sales Revenue 178500 210000 220500 273000 882000 Cost of good sold 107100 126000 132300 163800 529200 Gross Profit 71400 84000 88200 109200 352800 Selling and Administrative expens 17850 21000 22050 27300 88200 Net Income 53550 63000 66150 81900 264600 c. Explain why two executive officers in the same company could have different estimates of future growth. Same executive officers can have different estimates of future growths, depending upon the market feed back they have. It is necessary for the emangement to study the feed back and compare with actual study in the market, before taking any decision.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.