Profit PLanning

| October 22, 2018

PART C

20%

Write
a report to management to accompany your budgets.

This
report should include:

1
comments on the
feasibility of the proposed option of selling Treen

to South Island
customers.

2
calculation of break-even pointunder the master
budget and the

South Island option.

3
any assumptions that are
apparent from this budgetary process.

4
any non-financial
considerations which you regard as relevant to
the

South Island expansion
proposal.

5
a clear recommendation as
to whether the company should proceed

with the expansion to the
South Island market for the

Beta
Limited

Budgeted Income
Statement

For the Year Ended
December 31, 2013

QUARTER

1
2
3
4
Year

March
June
September
December

Revenue
$ 390,000
$ 465,000
$ 502,500
$ 510,000
$ 1,867,500

Less Variable Expenses

Cost of Good Sold
$ 144,300
$ 172,050
$ 185,925
$ 188,700
$ 690,975

Selling & Admin
$ 99,606
$ 118,761
$ 128,339
$ 130,254
$ 476,960

$ 243,906
$ 290,811
$ 314,264
$ 318,954
$ 1,167,935

Contribution Margin
$ 146,094
$ 174,189
$ 188,237
$ 191,046
$ 699,566

Less Fixed Expenses

Manufacturing Overhead
$ 78,000
$ 78,000
$ 78,000
$ 78,000
$ 312,000

Selling & Admin
$ 15,720
$ 15,720
$ 15,720
$ 15,720
$ 62,880

$ 93,720
$ 93,720
$ 93,720
$ 93,720
$ 374,880

Net Operating Income
$ 52,374
$ 80,469
$ 94,517
$ 97,326
$ 324,686

Interest Expense
$ –
$ 263
$ –
$ –
$ 263

Machine Interest Expense
$ –
$ 450
$ 1,350
$ 1,350
$ 3,150

Net
Income Before Tax
$
52,374
$
79,756
$
93,167
$
95,976
$
321,273

Income Tax
$ 14,665
$ 22,332
$ 26,087
$ 26,873
$ 89,956

Net
Income After Tax
$
37,709
$
57,424
$
67,080
$
69,103
$
231,316

year ending 31 December
2013.

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