Question

The following is the income statement for Harry Potter’s business operations last year.

	Harry Potter Pty Limited
	Income Statement
	For the Year ended 30 June 2007
Sales			446,420
Less: Cost of Goods sold			316,512
Gross profit				129,908
Operating expenses
Accounting fees			650
Advertising			3,239
Bank charges			244
Depreciation			632
Electricity			778
Insurances			1,420
Interest paid			1,600
Legal fees			200
Rent			40,900
Stationery			416
Sundries			374
Superannuation			1,384
Telephone			894
Wages			34,612
Total operating expenses				87,343
Net profit				42,565

The following information is supplied for preparation of the budgets for coming year:

• 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
• Wages paid are expected to increase by 5% each year.
• All other operating expenses are expected to increase by 4% each year.

Requirement:

Using the above information, prepare the budget for year 2008. (FNSCORG609A/03-3) Do not use Microsoft word

Answer 1

		Harry Potter Pty Limited
			BUDGET
			For the Year 2008
	A	Sales			491062.00		(446420*1.1
	B=A-C	Less: Cost of Goods sold			343743.40
	C=A*30%	Gross profit				147318.60	(30%*491062)
		Operating expenses
		Accounting fees			676.00		(650*1.04)
		Advertising			4039.00		(3239+800)
		Bank charges			253.76		(244*1.04)
		Depreciation			632.00
		Electricity			809.12		778*1.04)
		Insurances			1476.80		(1420*1.04
		Interest paid			1600.00
		Legal fees			208.00		(200*1.04)
		Rent			43354.00		(40900*1.06)
		Stationery			432.64		(416*1.04)
		Sundries			388.96		(374*1.04)
		Superannuation			3270.83		(36342.6*9%)
		Telephone			929.76		(894*1.04)
		Wages			36342.60		(34612*1.05)
	D	Total operating expenses				94413.47
	E=C-D	Net profit				52905.13