Question

Case Analysis: Xample Manufacturing Annual Draft Operating Budget

[WLO: 2] [CLO: 6]

Prior to beginning work on this assignment, read A Budget Model for a Small Manufacturing Firm (1995).

Review the Xample Manufacturing Case below. Using the information and the financial data derived in the Xample Case, and after reading Fleming’s article, create an annual budget in draft form divided into four periods (Quarter 1, Quarter 2, Quarter 3, and Quarter 4) using the provided budget template.

Xample Manufacturing Case:

Consider the following case scenario: Imagine you are a manager of a small plastic parts manufacturing contracting business making parts under contract to electronic consumer goods industry and defense industry companies, and you are in charge of developing a projected annual operating budget.

Your budgetary figures are as follows: For fiscal year 2019, your firm received a $3 million contract from Sony to provide small parts for its current Ultra HD Blu Ray Player, as well as various contracts totaling $1.75 million from other business. Xample also has an $180,000 annual contract from Boeing, and a contract for small plastic parts contract from Ratheon totaling $1.6 million annually.

Your chief financial officer (CFO) has provided you with the following annual expenses:

Xample Manufacturing Expenses

Annual Salaries                                                $1.63 million

Annual Benefits                                                $ 245,000

Annual Rent                                                     $ 760,000

Annual Insurance                                             $ 45,000

Annual Depreciation                                         $ 780,000

Annual Overhead                                             $ 180,000

Annual Supplies                                                $ 96,000

Annual Raw Materials                                       $ 2.6 million

Using the Xample Manufacturing Operating Budget Template,

Complete a 12-month operating budget in which you include the projected net profit (or loss). Turn in with the summary,

After completing the budget template, please write a two- to three-page summary including the following:

Explain the process for creating an operating budget and its importance.

Describe how revenues and expenses are grouped for planning and control in the financial statements.

The Case Analysis: Xample Manufacturing Annual Draft Operating Budget paper

Answer 1

Assumption :- As the information is not given how much expenses and revenues have been incurred so the annual payment has been divided equally among four quaters .

Operating Budget (2019)

	Quarter 1	Quarter 2	Quarter 3	Quarter 4	TOTAL (add across)
Revenue
Sony Contract	750000	750000	750000	750000	30,00,000
Boeing Contract	437500	437500	437500	437500	17,50,000
Ratheon Contract	45000	45000	45000	45000	1,80,000
Other Income	400000	400000	400000	400000	16,00,000
PROJECTED TOTAL INCOME	1632500	1632500	1632500	1632500	65,30,000
Costs and Expenses
Salaries	407500	407500	407500	407500	16,30,000
Benefits	61250	61250	61250	61250	2,45,000
Rent	190000	190000	190000	190000	7,60,000
Insurance	11250	11250	11250	11250	45000
Depreciation	195000	195000	195000	195000	7,80,000
Overhead	45000	45000	45000	45000	1,80,000
Supplies	24000	24000	24000	24000	96000
Raw Materials	650000	650000	650000	650000	26,00,000
PROJECTED TOTAL EXPENSES	1584000	1584000	1584000	1584000	63,36,000
PROJECTED NET PROFIT/(LOSS)	48500	48500	48500	48500	194000