Question

Use the income statement and additional information provided below and the appropriate software to prepare the annual budgeting income statement for the next three year. You need to save and upload your budget to Moodle with the final submission for this assessment.

Additional information

?? Annual sales are expected to increase by 10% each year

?? Expected average gross profit margin is 30%

?? Advertising costs are expected to increase by $800 each year

?? Depreciation charges are the same each year

?? Interest paid is the same each year

?? Annual rent is expected to increase by 6% each year

?? Superannuation is 9 % of wages and is expected to increase 0.25% each year

?? Wages are expected to increase by 5% each year

?? All other operating expenses are expected to increase by 4% each year

budget Revenue Sale 446420 less Total COGS 316512 Gross profit 129908 less operation expense Account fees 650 advertising 3239 bank charges 244 Depreciation 632 Electricity 778 Insurance 1420 interest paid 1600 legal fees 200 rent 40900 stationary 416 sundries 374 superannualtion 1384 telephone 894 wages 34612 total operating expense 87343 Net profit 42565

Answer 1

Budget
	Base Year	Year 1	Year 2	Year 3
Sale Revenue	$ 446,420.00	$ 491,062.00	$ 540,168.20	$ 594,185.02
Less: Total COGS	$ 316,512.00	$ 343,743.40	$ 378,117.74	$ 415,929.51
Gross profit	$ 129,908.00	$ 147,318.60	$ 162,050.46	$ 178,255.51
Less: operation expense
Account Fees	$          650.00	$          676.00	$          703.04	$          731.16
Advertising	$      3,239.00	$      4,039.00	$      4,839.00	$      5,639.00
Bank Charges	$          244.00	$          253.76	$          263.91	$          274.47
Depreciation	$          632.00	$          632.00	$          632.00	$          632.00
Electricity	$          778.00	$          809.12	$          841.48	$          875.14
Insurance	$      1,420.00	$      1,476.80	$      1,535.87	$      1,597.31
Interest Paid	$      1,600.00	$      1,600.00	$      1,600.00	$      1,600.00
Legal Fees	$          200.00	$          208.00	$          216.32	$          224.97
Rent	$    40,900.00	$    43,354.00	$    45,955.24	$    48,712.55
Stationary	$          416.00	$          432.64	$         449.95	$          467.94
Sundries	$          374.00	$          388.96	$          404.52	$          420.70
Superannuation	$      1,384.00	$      3,270.83	$      3,529.78	$      3,806.43
Telephone	$          894.00	$          929.76	$          966.95	$      1,005.63
Wages	$    34,612.00	$    36,342.60	$    38,159.73	$    40,067.72
Total operating expense	$    87,343.00	$    94,413.47	$ 100,097.79	$ 106,055.03
Net profit	$    42,565.00	$    52,905.13	$    61,952.67	$    72,200.48

Superannuation is taken to be 9% first year, 9.25% for second year and 7.50% for third year.