Question

Your task is to create the 2021 Budget in an Excel Spreadsheet.  You only need to prepare an Income Statement

Assume:

1. The company will sell 16,000 bicycles at an average price of $2,500 each
2. Cost of Labor is 20% of Sales
3. Cost of Materials is 10% of Sales
4. Variable Overhead is 6% of Sales
5. Fixed Manufacturing Overhead is $4,000,000
6. Office Salaries are 5,000,000
7. Office Deprecation Expense is $500,000
8. Lease Expense of Corporate Office is $2,000,000
9. Advertising is $1,000,000
10. Income Taxes are 30% of all revenues minus all expenses before income taxes.

The Board of Directors will also want to know, with the assumptions above what would be the company’s:

1. Gross Profit Margin?
2. Operating Profit Margin?
3. Net Profit Margin?
4. Number of bicycles to sell to breakeven?  Assume if the company is breakeven, income taxes will be zero.

Answer 1

Thank you.

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