Question

After carefully reviewing the company’s current financial situation, management team has decided to review the Proposed budget for year 2 and you are requested to prepare revised budget in accordance with organisational budgetary requirements for year 2 & 3.

Use appropriate software to prepare the budget and then attach it to this assessment tool.

My retail Business Budgeted Income Statement For year ended 30 June 2017
			Year 1
			$
Revenue
	Sales		458,580
less	TOTAL COST OF GOODS SOLD		334,764
	GROSS PROFIT		123,816
less OPERATING EXPENSES
	Accounting fees		560
	Advertising		4,168
	Bank charges		240
	Depreciation		632
	Electricity		762
	Insurances		1,650
	Interest paid		1,600
	Legal fees		210
	Rent		42,945
	Stationery		428
	Sundries		363
	Superannuation		3,488
	Telephone		936
	Wages		38,750
	Total operating expenses		96,732
	NET PROFIT		27,084

Additional information:

Annual sales are expected to increase by 20% each year

COST OF GOODS SOLD are expected to increase by 5% each year

Advertising costs are expected to increase by $500 each year

Depreciation charges are the same each year

Annual rent is expected to increase by 5% each year

Superannuation is 9.5 % of wages each year

Wages are expected to increase by 6% each year

All other operating expenses are expected to increase by 2% each year

Answer 1

			(AMOUNT IN $)
			YEAR 1	YEAR 2	YEAR 3
	REVENUE		458580	550296	660355.2
LESS:	TOTAL COST OF GOODS SOLD		-334764	-351502	-369077
	GROSS PROFIT	A	123816	198793.8	291277.9
LESS:	OPERATING EXPENSES
	ACCOUNTING FEES		560	571.2	582.624	(INCREASE 2% EACH YEAR)
	ADVERTISING		4168	4668	5168	(INCREASE 500 EACH YEAR)
	BANK CHARGES		240	244.8	249.696	(INCREASE 2% EACH YEAR)
	DEPRECIATION		632	632	632	(SAME EACH YEAR)
	ELECTRICITY		762	777.24	792.7848	(INCREASE 2% EACH YEAR)
	INSURANCES		1650	1683	1716.66	(INCREASE 2% EACH YEAR)
	INTEREST PAID		1600	1632	1664.64	(INCREASE 2% EACH YEAR)
	LEGAL FEES		210	214.2	218.484	(INCREASE 2% EACH YEAR)
	RENT		42945	45092.25	47346.86	(INCREASE 5% EACH YEAR)
	STATIONERY		428	436.56	445.2912	(INCREASE 2% EACH YEAR)
	SUNDRIES		363	370.26	377.6652	(INCREASE 2% EACH YEAR)
	SUPERANNUATION		3488	3902.125	4136.253	(9.5% OF WAGES)
	TELEPHONE		936	954.72	973.8144	(INCREASE 2% EACH YEAR)
	WAGES		38750	41075	43539.5	(INCREASE 6% EACH YEAR)
	TOTAL OPERATING EXPENSES	B	96732	102253.4	107844.3
	NET PROFIT	A-B	27084	96540.45	183433.6
	SALES INCREASE BY 20%
CALCULATION OF YEAR 2 SALES
	91716	458580*20/100
	458580	(91716+458580)
YEAR 2	5,50,296.00
CALCULATION OF YEAR 3 SALES
	550296
	110059	550296*20/100
	6,60,355.20	(550296+110059.2)
	COGS
	YR 2
	334764
	16738.2	(334764*0.05)
	351502.2
	YR 3
	351502.2
	17575.11	(351502.2*0.05)
	369077.31
SIMILARY INCREASE HAS TO BE CALCULATED FOR ALL OTHER EXPENSE