Expenses -accessories ($1) -Braiding hair($2 per pack) -edge control($7) -shampoo($87.5 to make it) -conditioner($92.5 to make...

Expenses

-accessories ($1)

-Braiding hair($2 per pack)

-edge control($7)

-shampoo($87.5 to make it)

-conditioner($92.5 to make it)

-oil($30 to make it)

-bottles for shampoo and conditioner($74)

-bottles for oil($40)

Gains

-selling shampoo for $10

-selling conditioner for $12

-selling oil for $5

-Shampoo and conditioner package($20)

-Shampoo+conditioner+oil($25)

Is it possible to produce an projected income statement for a braiding company based on the information provided for the next three years

Expert Solution

It is not possible to produce complete projected income statement based on this information. Only Gross profit per unit can be arrived at based on the information provided (i.e.) Total Gains minus Total expenses, just for one year.

In order to prepare projected income statement for 3 years, following additional information are required:

- Number of units projected to be sold - item wise

- % increase in sales year on year

- Number of units required to be purchased in order to meet with sales (or) % of inventory to arrive at purchases.

- % increase year on year on the direct material cost information provided

- Indirect expenses like Staff Salaries, office rent, utility cost, other operating expenses are required for three years.

- information for any borrowing cost, tax rate applicable are required to arrive at net income.

Only with all the above information, Projected income statement can be prepared for three years.

ekkarill92 answered 3 months ago

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