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Vinil7 [7]
3 years ago
6

Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements

for the last four quarters follow:
First Quarter Second Quarter Third Quarter FourthQuarter Total
Sales Revenue $ 90,000 $ 100,000 $ 105,000 $ 130,000 $425,000
Cost of goods sold (54,000) (60,000) (63,000) (78,000) (255,000)
Gross profit 36,000 40,000 42,000 52,000 170,000
Selling &
Administrating
Expenses (8,500) 10,000 (10,500) (13,000) (42,000)
Net income $ 27,500 $ 30,000 $ 31,500 $ 39,000 $128,000
Historically, cost of goods sold is about 60 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue. Fred Arvada, the chief executive officer, told Mr. Long that he expected sales next year to be 8 percent for each respective quarter above last year’s level. However, Rita Banks, the vice president of sales, told Mr. Long that she believed sales growth would be only 5 percent.
Required:
1) Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada’s estimate.
2) Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks’ estimate.

Business
1 answer:
mestny [16]3 years ago
8 0

The equation and the way how to do it in a data editing program like excel is seen in the problem and the answers are in the answer.

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It would be an increase of $6.000 as <span>the effect in net income ($15 selling price less $13 variable cost (the original $12 plus the $1 shipping cost)) or $2 per scale. </span>

8 0
3 years ago
True or false: The loss on the sale of a principal residence is classified as a deductible capital loss.
nadezda [96]
The answer is true not false
4 0
2 years ago
Aragon and Associates has found from past experience that 25% of its services are for cash. The remaining 75% are on credit. An
____ [38]

Answer:

<u>schedule of cash receipts</u>

                                    May         June       July        August   September

                                      $                $           $               $                 $

Credit Fees (75%)    135,000  150,000  142,500    145,500  180,000

Cash Sales (25%)      45,000   40,000    47,500     48,500    60,000

Credit Receipt (10%)  13,500    15,000     14,250      14,550     18,000

Credit Receipt (60%)      0        81,000    90,000     85,500    87,300

Credit Receipt (26%)      0            0          35,100      39,000    37,050

Total Receipts           58,500  136,000  186,850    187,550   202,350

Explanation:

The schedule of cash receipts must include the cash sales and other amounts received for credit sales <u>in the respective months and amounts</u> as outlined by the question.

 

5 0
3 years ago
Kellogg's has several cereals targeted at different types of users. This is an example of multiple products aimed at multiple ma
AleksAgata [21]

Answer:

The correct answer is number "3": doesn't reduce quality or increase price.

Explanation:

Different groups of people within a market imply different needs and preferences pushing companies to diversify in order to fulfill them. Though, one of the main characteristics of that diversification must be accessibility. Companies expect to gain in sales thanks to the segmentation of the market but not necessarily by increasing the price of the new products being sold or decreasing their quality.

3 0
3 years ago
In Macroland, currency held by the public is 2,000 econs, bank reserves are 300 econs, and the desired reserve/deposit ratio is
kotegsom [21]

Answer:

the money supply in Macroland will increase from <u>5,000</u> econs to <u>7,000</u> econs

Explanation:

Currently, Macroland's money supply = 2,000 econs held by the public and 3,000 econs held by the banks (= 300 econs x 1/0.1).

In order to determine the increase in the money supply we must multiply the inflow of econs by the money multiplier. The money multiplier = 1 / reserve ratio = 1/0.1 = 10.

Since the government is injecting 200 econs to the economy, the increase in the money supply = 200 econs x 10 = 2,000 econs.

So now, Macroland's money supply will increase from 5,000 to 7,000 econs.

The money multiplier measures the banking system's ability to "create" money. The banking system creates money by first receiving deposits, e.g. you deposit 10 econs in your savings account, and then lending money to another client. The bank will lend 9 econs (-10% required reserve) to John that will purchase a bike. The seller of the bike receives the money form John and deposits the 9 econs in his own bank. Then this second bank will lend 8.10 econs to Sarah. Sarah will use the money to purchase a new computer and a printer from Tom. Tom then deposits the money in his bank, and then his bank lends 7.29 econs to Sally, and the wheel goes on and on.

This money creating process is possible because Macroland uses a fractional banking system, which means that the banks are only required to keep a fraction of total deposits as reserves.

7 0
3 years ago
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