Question

Penny decided that the interest shown by the East Rutherford, N.J., Gay, Lesbian, Bisexual, and Transgender Alliance justified further research and the creation of a projected income statement as part of an evaluation of the feasibility of starting a business. She found a small industrial space she could rent for $1,000 per month. She estimated her initial need for employees to be a total of four, whom she would pay $10 an hour. A 40-hour work week was planned. She also budgeted $500 a week to pay herself. Assume everyone, including Penny, works 52 weeks per year. Her expenses associated with payroll (e.g., social security, unemployment insurance, fringe benefits) amounted to 20% of total compensation. Other expenses were estimated as:

Answer 1

Answer:

Total Annual Expense = $173040

Explanation:

Note: This question is incomplete and lacks the data and instruction for the question to solve it. I have retrieved its data from the internet. However, I will be solving this by using the data to find out the expenses portion of an annual income statement.

Solution:

Data Given:

Rent = $1000 of a month

Owner Salary = $500 per week

Employee Wages = $10 an hour

Total employees = 4

Working hours = 40 hours work week

Working weeks in year = 52 weeks.

Payroll Expense = 20% of the total compensation

Shipping = $250/week

Insurance = $50/week

Office Supplies = $25/week

Acct/Legal = $50/week

Utilities = $200/week

Misc = $100/week

Following is the expenses portion of an annual income statement for Penny blossoms:  

Rent = $1000 x 12 = $12000

Owner Salary = ($500 x 4) x 12 = $24000

Employee Wages = $10 an hour = (10 x 40) x 52 x 4 = $83200

Payroll Expense = 20% of the total compensation = 20% x ($83200 + $24000) = $21440

Shipping =  $250/week  = (250 x 4) x 12 = $12000

Insurance = $50/week  = (50 x 4) x 12 = $2400

Office Supplies = $25/week = 25 x 4 x 12 = $1200

Acct/Legal =  $50/week = 50 x 4 x 12 = $2400

Utilities = $200/week = 200 x 4 x 12 = $9600

Misc = $100/week  = 100 x 4 x 12 = $4800

Total Expense is the sum of all annual expenses.

Total Expense = $173040