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| EXHIBIT 8 — GENERAL & ADMINISTRATIVE BUDGET Estimated for each line item per Department Managers: Management Personnel $110,000 Accounting Personnel 55,000 Legal Personnel 40,000 Technology Personnel 45,000 Rent & Utilities 25,000 Supplies 15,000 Miscellaneous 7,500 Total G & A Expenses $ 297,500 Budgeted Financial Statements Based on the detail budgets we have prepared (Exhibits 1 thru 8), we can finalize our budgets in the form of a Budgeted Income Statement. A few new line items are added to account for non-operating items, such as income received on investments and financing costs. The Finance and Tax Departments will assist in estimating items like financing expenses and income tax expenses. The Budgeted Income Statement will pull together all revenue and expense estimates from our previously prepared detail budgets. EXHIBIT 9 — BUDGETED INCOME STATEMENT Revenues (Exhibit 1) $720,000 Less Cost of Goods Sold (Exh 6) (144,125) Gross Profit 575,875 Less Marketing (Exhibit 7) (135,500) Less G & A (Exhibit 8) (297,500) Operating Income 142,875 Less Interest on Debt ( 8,000) Income Before Taxes 134,875 Taxes @ 37.5% ( 50,578) Net Income $ 84,297 Chapter 3 7 EXAMPLE 2 — BUDGETED INCOME STATEMENT Halton Company has compiled the following information: Planned sales are 50,000 units at a price of $ 110.00 per unit. Beginning Inventory consists of 5,000 units at a cost of $ 60.00 per unit. Planned production is 55,000 units with the following production cost: Direct Materials are $ 18.50 per unit Direct Labor required is 4 hours per unit @ $ 12.00 per hour Overhead is estimated at 20% of Direct Labor Cost Desired Ending Inventory is 6,000 units under the LIFO Method. Marketing Expenses are budgeted at $ 350,000 General & Administrative Expenses are budgeted at $ 400,000 < - - - - - - - - - - - - - - - Budgeted Income Statement - - - - - - - - - - - - - - > Sales (50,000 x $ 110) $ 5,500,000 Less Cost of Goods Sold: Beginning Inventory (5,000 x $ 60.00) $ 300,000 Direct Materials (55,000 x $ 18.50) 1,017,500 Direct Labor (55,000 x 4 hours x $ 12.00) 2,640,000 Overhead ($ 2,640,000 x .20) 528,000 Cost of Available Sales 4,485,500 Less Ending Inventory (1) ( 380,500) Cost of Goods Sold (4,105,000) Gross Profits 1,395,000 Less Operating Expenses: Marketing Expenses ( 350,000) General & Administrative ( 400,000) Net Income $ 645,000 (1) Under LIFO, last costs in are: $ 1,017,500 + $ 2,640,000 + $ 528,000 = $ 4,185,500 / 55,000 = $ 76.10 x 5,000 = $ 380,500. Now that we have a Budgeted Income Statement, we can prepare a Budgeted Balance Sheet. The Budgeted Balance Sheet will provide us with an estimate of how much external financing is required to support our estimated sales. The main link between the Income Statement and the Balance Sheet is Retained Earnings. Therefore, preparation of the Budgeted Balance Sheet starts with an estimate of the ending balance for Retained Earnings. In order to estimate ending Retained Earnings, we need to project future dividends based on current dividend policies and what management expects to pay in the next planning period. http://thefinancialtrainingacademyltd.studioathome.com http://thefinancialtrainingacademyltd.blogspirit.com/ http://thefinancialtrainingacademyltd.alkablog.com http://thefinancialtraining.blogster.com/ http://tommyblogmaster.livejournal.com/ http://blogs.grab.com/tommyblogmaster http://members.greenpeace.org/blog/tommylee http://thefinancialtrainingacademyltd.blogspot.com/ http://thefinancialtrainingacademyltd.wordpress.com http://www.bloglines.com/blog/thefinancialtrainingacademy http://thefinancialtrainingacademyltd.bloghi.com http://thefinancialtrainingacademyltd.tripod.com/ http://journals.aol.com/tommyblogmaster/the-financial-training-academy-l/ http://blog.flickr.com/en http://blogs.ign.com/tommyblogmaster http://tommyblogmaster.greatestjournal.com/ http://tommyblogmaster.iziblog.net/ http://www.naymz.com/ http://www.xanga.com/thefinancialtrainingacademyltd http://thefinancialtraining.multiply.com/journal http://my.20six.co.uk/thefinancialtraining http://thefinancialtraining.blogsome.com http://www.linkedin.com/in/thefinancialtrainingacademyltd http://360.yahoo.com/tommyblogmaster http://geocities.com/tommyblogmaster/blog.html http://www.freewebs.com/thefinancialtrainingacademyltd/thefinancialtraining.htm http://tommyblogmaster.googlepages.com/home http://www.myownjournal.com/journal.php?u_mem=financialtrain http://www.opendiary.com/entrylist.asp?authorcode=D721527 http://thefinancialtrainingacademyltd.bravejournal.com/ http://www.my-diary.org/users/276732 http://thefinancialtraining.mydeardiary.com/ http://www.familytimes.com/journalhome/711 http://www.43things.com/person/thefinancialtraining http://thefinancialtrainingacademyltd.blog.co.uk/ http://www.selectablog.com/thefinancialtraining/ http://thefinancialtrainingacademyltd.dakotablogs.com/ http://thefinancialtraining.outblogger.com/ http://thefinancialtrainingacademyltd.daria.be/ http://server.blogghost.net/thefinancialtrainingacademyltd/ http://clearblogs.com/thefinancialtrainingacademyltd/ http://thefinancialtrainingacademyltd.bloggerteam.com/ http://thefinancialtrainingacademyltd.ebloggy.com/ http://thefinancialtraining.blogs.ie/ http://teenblog.org/thefinancialtrainingacademyltd/ http://thefinancialtrainingacademyltd.myweblog.com/ http://thefinancialtra.egoweblog.com/ http://www.bahraichblogs.com/thefinancialtrainingacademyltd/ http://thefinancialtrainingacademyltd.blogbeee.com/ http://eduspaces.net/thefinancial/weblog/ http://thefinancialtradingacademyltd.theblog.net http://thefinancialtradingacademyltd.nightblog.net http://thefinancialtradingacademyltd.atravelblog.net http://thefinancialtradingacademyltd.art-blog.net http://thefinancialtradingacademyltd.animalblog.net http://thefinancialtradingacademyltd.funblogged.com http://thefinancialtradingacademyltd.explaining.net http://thefinancialtradingacademyltd.reviewing.net http://thefinancialtradingacademyltd.enjoying.net http://www.ftaserver.co.uk/index.html | ||
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