Company Objectives : Big Red Bicycle is a bicycle manufacturer based in Bendigo
ID: 2791342 • Letter: C
Question
Company Objectives:
Big Red Bicycle is a bicycle manufacturer based in Bendigo Victoria. The company produces bicycles which it sells to retailers in the domestic Australian market.
According to company strategic plans, the company had aimed to achieve a net profit before tax of $1,000,000.
This year, in addition to Australian operations, the company is considering manufacturing overseas to take advantage of reduced costs.
The company is also considering diversifying its product range to reduce exposure to poor sales of one product.
Master Budget
You are required to complete the Master Budget 2011/2012 template (Appendix 1).
1.Divide expenses equally throughout the year except for sales.
2.Commission for the sales team is 2.5% of gross sales.
Appendix 1:
Big Red Bicycle Company
Master Budget 2011/2012
FY
Q1
Q2
Q3
Q4
REVENUE
Commissions
77,500
Direct wages fixed
200,000
Sales
3,100,000
Cost of Goods Sold
400,000
Gross Profit
2,422,500
EXPENSES
General & Administrative Expenses
Travel
20,000
Legal Fees
5,000
Bank Charges
600
Office Supplies
5,000
Postage & Printing
400
Dues & Subscriptions
500
Telephone
10,000
Repairs & Maintenance
50,000
Payroll Tax
25,000
Marketing Expenses
Advertising
200,000
Employment Expenses
Superannuation
45,000
Wages & Salaries
500,000
Staff Amenities
20,000
Occupancy Costs
Electricity
40,000
Insurance
100,000
Rates
100,000
Rent
200,000
Water
30,000
Waste Removal
50,000
TOTAL EXPENSES
1,401,500
NET PROFIT (BEFORE INTEREST & TAX)
1,021,000
Income Tax Expense (25%)
255,250
NET PROFIT AFTER TAX
765,750
Big Red Bicycle Company
Master Budget 2011/2012
FY
Q1
Q2
Q3
Q4
REVENUE
Commissions
77,500
Direct wages fixed
200,000
Sales
3,100,000
Cost of Goods Sold
400,000
Gross Profit
2,422,500
EXPENSES
General & Administrative Expenses
Travel
20,000
Legal Fees
5,000
Bank Charges
600
Office Supplies
5,000
Postage & Printing
400
Dues & Subscriptions
500
Telephone
10,000
Repairs & Maintenance
50,000
Payroll Tax
25,000
Marketing Expenses
Advertising
200,000
Employment Expenses
Superannuation
45,000
Wages & Salaries
500,000
Staff Amenities
20,000
Occupancy Costs
Electricity
40,000
Insurance
100,000
Rates
100,000
Rent
200,000
Water
30,000
Waste Removal
50,000
TOTAL EXPENSES
1,401,500
NET PROFIT (BEFORE INTEREST & TAX)
1,021,000
Income Tax Expense (25%)
255,250
NET PROFIT AFTER TAX
765,750
Explanation / Answer
Check below excel for the answer:
FY
Q1
Q2
Q3
Q4
REVENUE
Commissions
77,500
19,375
19,375
19,375
19,375
Direct wages fixed
200,000
50,000
50,000
50,000
50,000
Sales
3,100,000
775,000
775,000
775,000
775,000
Cost of Goods Sold
400,000
100,000
100,000
100,000
100,000
Gross Profit
2,422,500
605,625
605,625
605,625
605,625
EXPENSES
0
General & Administrative Expenses
0
Travel
20,000
5,000
5,000
5,000
5,000
Legal Fees
5,000
1,250
1,250
1,250
1,250
Bank Charges
600
150
150
150
150
Office Supplies
5,000
1,250
1,250
1,250
1,250
Postage & Printing
400
100
100
100
100
Dues & Subscriptions
500
125
125
125
125
Telephone
10,000
2,500
2,500
2,500
2,500
Repairs & Maintenance
50,000
12,500
12,500
12,500
12,500
Payroll Tax
25,000
6,250
6,250
6,250
6,250
Marketing Expenses
0
Advertising
200,000
50,000
50,000
50,000
50,000
Employment Expenses
0
Superannuation
45,000
11,250
11,250
11,250
11,250
Wages & Salaries
500,000
125,000
125,000
125,000
125,000
Staff Amenities
20,000
5,000
5,000
5,000
5,000
Occupancy Costs
Electricity
40,000
10,000
10,000
10,000
10,000
Insurance
100,000
25,000
25,000
25,000
25,000
Rates
100,000
25,000
25,000
25,000
25,000
Rent
200,000
50,000
50,000
50,000
50,000
Water
30,000
7,500
7,500
7,500
7,500
Waste Removal
50,000
12,500
12,500
12,500
12,500
TOTAL EXPENSES
1,401,500
350,375
350,375
350,375
350,375
NET PROFIT (BEFORE INTEREST & TAX)
1,021,000
255,250
255,250
255,250
255,250
Income Tax Expense (25%)
255,250
63,812.5
63,812.5
63,812.5
63,812.5
NET PROFIT AFTER TAX
765,750
191,437.5
191,437.5
191,437.5
191,437.5
FY
Q1
Q2
Q3
Q4
REVENUE
Commissions
77,500
19,375
19,375
19,375
19,375
Direct wages fixed
200,000
50,000
50,000
50,000
50,000
Sales
3,100,000
775,000
775,000
775,000
775,000
Cost of Goods Sold
400,000
100,000
100,000
100,000
100,000
Gross Profit
2,422,500
605,625
605,625
605,625
605,625
EXPENSES
0
General & Administrative Expenses
0
Travel
20,000
5,000
5,000
5,000
5,000
Legal Fees
5,000
1,250
1,250
1,250
1,250
Bank Charges
600
150
150
150
150
Office Supplies
5,000
1,250
1,250
1,250
1,250
Postage & Printing
400
100
100
100
100
Dues & Subscriptions
500
125
125
125
125
Telephone
10,000
2,500
2,500
2,500
2,500
Repairs & Maintenance
50,000
12,500
12,500
12,500
12,500
Payroll Tax
25,000
6,250
6,250
6,250
6,250
Marketing Expenses
0
Advertising
200,000
50,000
50,000
50,000
50,000
Employment Expenses
0
Superannuation
45,000
11,250
11,250
11,250
11,250
Wages & Salaries
500,000
125,000
125,000
125,000
125,000
Staff Amenities
20,000
5,000
5,000
5,000
5,000
Occupancy Costs
Electricity
40,000
10,000
10,000
10,000
10,000
Insurance
100,000
25,000
25,000
25,000
25,000
Rates
100,000
25,000
25,000
25,000
25,000
Rent
200,000
50,000
50,000
50,000
50,000
Water
30,000
7,500
7,500
7,500
7,500
Waste Removal
50,000
12,500
12,500
12,500
12,500
TOTAL EXPENSES
1,401,500
350,375
350,375
350,375
350,375
NET PROFIT (BEFORE INTEREST & TAX)
1,021,000
255,250
255,250
255,250
255,250
Income Tax Expense (25%)
255,250
63,812.5
63,812.5
63,812.5
63,812.5
NET PROFIT AFTER TAX
765,750
191,437.5
191,437.5
191,437.5
191,437.5
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