please explain your answer Historically, cost of goods sold is about 60 percent of sales revenue. Selling and administrative expenses are about 10 percent of salesrevenue.Fred Arvada, the chief executive officer, told Mr. Long that he expected sales next year to be 15 percent for each respective quarterabove last year's level. However, Rita Banks, the vice president of sales, told Mr. Long that she believed sales growth would be only 10percent.Requireda. Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada's estimate.b. Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks' estimate.Complete this question by entering your answers in the tabs below.Required A Required BPrepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada's estimate.SecondFirst QuarterThird QuarterQuarterFourthQuarterTotalNet incomeSales revenueCost of goods soldGross profitSelling & administrative expenses$0$0 $$000000000$0$0Required ARequired B>

Certainly, let's build the pro forma income statements based on the provided…

Answered: Historically, cost of goods sold is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Use the following (very simplified) numbers in creating your pro-forma income statement: Sales start at $1000 for January and increase by 10% per month (so, February sales will be $1100, March sales will be $1210, etc.). The venture uses a markup of 100%, so the cost of goods is 50% of the sales amount (so, January cost of goods is $500, February cost of goods is $550, etc.). The venture pays a salary of $500/month for the first 6 months, then hires an additional employee in July and pays $1000/month for the rest of the year. The venture pays a total overhead cost (including rent, utilities, and insurance) of $50/month. Payroll taxes start out at $20/month for January-June, then increase to $40/month for July-December. The venture's assets depreciate by $10/month. Office expenses are $15/month for January-April, increase to $25/month for May-August, and go back down to $15/month for September-December
Data for Hermann Corporation are shown below: Fixed expenses are $77,000 per month and the company is selling 2,600 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,200 and monthly sales increase by $15,300 ? 1-b. Should the advertising budget be increased? Complete this question by entering your answers in the tabs below. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,200 and monthly sales increase by $15,300 ? (Round any unit calculations up to the nearest whole unit.)
The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account):1st Quarter 2nd Quarter 3rd Quarter 4th QuarterBudgeted unit sales ............................ 11,000 12,000 14,000 13,000The selling price of the company’s product is $18.00 per unit. Management expects to collect 65% of salesin the quarter in which the sales are made, 30% in the following quarter, and 5% of sales are expected to beuncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in thefi rst quarter, is $70,200.The company expects to start the first quarter with 1,650 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 15% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,850 units.Required:1. Prepare the company’s sales budget and schedule of expected cash…
3) A shoe retailer plans, for the period, net sales of $3,000,000 with a 20% profit and 25% operating expenses. The anticipated markdowns are 15%, along with sales discounts at 2% and shortages of 3%. Cash discounts to be earned are estimated at 5%, and alterations are 1% of net sales. What initial markup % is needed for this retailer's merchandise to achieve the desired profit goal?
Dodge Ball Bearings had sales of 14,000 units at $70 per unit last year. The marketing manager projects a 15 percent increase in unit volume sales this year with a 10 percent price decrease (due to a price reduction by a competitor). Returned merchandise will represent 10 percent of total sales. What is your net dollar sales projection for this year? Net sales
Dodge Ball Bearings had sales of 12,000 units at $80 per unit last year. The marketing manager projects a 30 percent increase in unit volume sales this year with a 15 percent price decrease (due to a price reduction by a competitor). Returned merchandise will represent 7 percent of total sales. What is your net dollar sales projection for this year?
A store sells a product that has the annual demand of 16,156 units. It purchases the product from supplier A for $74.4 per unit. The unit inventory carrying cost per year is 14 percent of the unit purchase cost. The cost to place and process an order from the supplier is $107 per order. Supplier A has a delivery lead time of 7 days. The store operates 300 days a year. Assume EOQ model is appropriate. What is the optimal total annual inventory and purchase cost for the store? Use at least 4 decimal places.
A company is launching a new sales initiative and expects sales of $446,838 during the first year, and the gross profit margin to be 25%. To prepare for this, they plan to acquire 49 days worth of inventory. Their vendor will allow 48 days to pay its invoices. The company plans to sell only on account to its customers, so sales will be entirely credit based, and the average invoice is expected to take 44 days to collect. What amount of net working capital should be included in the initial investment? Enter your answer as a monetary amount rounded to four decimal places, but without the currency symbol. For example, if your answer is $90.1234, enter 90.1234 Type your answer...
The Food division of Garcia Company reports the following for the current year. Sales Cost of goods sold Gross profit Expenses Income $4,000,000 2,800,000 1,200,000 1,000,000 $ 200,000 Garcia wants to achieve at least a 10% profit margin next year. Two alternative strategies are proposed. Strategy 1: Increase advertising expenses by $225,000. The company expects this to increase sales by $600,000. Cost of goods sold will not change. Strategy 2: Develop a more efficient manufacturing process. This will decrease cost of goods sold by $140,000. a. For each strategy, compute the profit margin expected for next year. b. Which strategy should Garcia choose based on expected profit margin? Complete this question by entering your answers in the tabs below. Required 1 Required 2 For each strategy, compute the profit margin expected for next year. Note: Round your answers to one decimal place. Strategy 1 Strategy 2 Profit margin Required 2 >
The Black is trying to plan for the next year. Their sales forecast for the next year is $3,500,000. Using the following current income statement, prepare the proforma income statement for the next year. Pay attention to the separation of expenses into fixed and variable components.
The Black is trying to plan for the next year. Their sales forecast for the next year is $3,500,000. Using the following current income statement, prepare the proforma income statement for the next year. Pay attention to the separation of expenses into fixed and variable components. can you explain in more detailed
The Food division of Garcia Company reports the following for the current year. Sales Cost of goods sold Gross profit Expenses Income Garcia wants to achieve at least a 10% profit margin next year. Two alternative strategies are proposed. Strategy 1: Increase advertising expenses by $225,000. The company expects this to increase sales by $660,000. Cost of goods sold will not change. Strategy 2: Develop a more efficient manufacturing process. This will decrease cost of goods sold by $127,000. a. For each strategy, compute the profit margin expected for next year. b. Which strategy should Garcia choose based on expected profit margin? Complete this question by entering your answers in the tabs below. Required 1 $ 4,180,000 2,860,000 1,320,000 1,029,000 $ 291,000 Required Strategy 1 Strategy 2 For each strategy, compute the profit margin expected for next year. Note: Round your answers to one decimal place. Profit margin % %

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS