Task #1: South Shore Medical Clinic is expanding its operations. As you will not

Question

Task #1: South Shore Medical Clinic is expanding its operations. As you will notice from Year 3 to Year 4, they have increased their revenue and encounted additional expenses. In addition, they have rented a new office at the end of the year so their rent expense is going to increase (they will now have two offices). In addition, they have added 2 additional staff members to payroll. Using the Income Statement below, prepare a budget that takes these changes into account for the upcoming year. Suggest the budget amounts for Year 5 in the column below.

ACTUAL BUDGET Revenues: Service Fee Revenue $ 160,000 Total Revenues Expenses: Advertising Expense $    20,000 Shipping Expense $    12,000 Salaries Expense $    80,000 Rent Expense $    32,000 Utilities Expense $      5,200 Total Expenses Income: Net Income $    10,800 Operating Margin:

Explanation / Answer

Operating margin ratio = Net income/Sales = 10800/160000 = 6.75% Thus, operating margin ratio is 6.75% Operatin efficiency = Output from the business/Input invested = 160000/149200 =           1.07 Since, more than 1 , operating efficiency is better.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.