2019 Administrative Budget Information The Administrative Department consists of the president and an office staff of eight who handle the secretarial, purchasing, and accounting duties (total of nine people). The following information is available regarding the 2018 actual costs. Variable Fixed Salaries $300,000 annual Fringe Benefits 20% of salaries Health Benefits $2,000 per employee Professional Fees $25,000 annually Office Supplies $.04 per gallon sold Telephone $.02 per gallon sold Depreciation $8,000 annually It is felt that the level of the office and administrative staff will be adequate for the coming year. It is expected that the following changes will occur in 2019. Variable Fixed Salaries Increase 3% annually Fringe Benefits No change Health Benefits Increase $250 per employee Professional Fees Increase of $2,000 Office Supplies Increase .01 per gallon sold Telephone Increase .01 per gallon sole Depreciation No change2019 Income Tax Information The current federal tax rate is 20%. All taxes for the year will be paid by the end of the year, which means there will be no accrued taxes on December 31, 2019. 2019 Accounts Receivable information It is expected that sales will occur evenly throughout the year and that there will be no cash sales. Seventyfive percent of monthly sales will be collected in the month following the sale, and the remaining 25% will be collected by the end of the second month. No bad debts are anticipated. 2019 Accounts Payable Information The account represents the purchases for raw materials only. It is expected that purchases will be made evenly throughout the year and that all purchases will be paid for during the month following the purchase. 2019 Wage and Salary Information The accrued wage account will include all direct labor, indirect labor, sales commissions and salaries, and administrative salariesAll wages are earned evenly throughout the year, and employees are paid twice each month. On December 31. 2019. the accrued wages will include wages representing one full payroll period. 2019 Property Plant and Equipment Information Properly. Plant. and Equipment consist of the following on December 31. 2013. Property and Plant $300,000 Equipment $1,155,000 Total $1,955,000 Each additional machine that is needed to support the production level expected during 2019 will cost $35,000 and be depreciated over 5 years using the straight-line method. Assume that any equipment purchases are made on the rst day of January and are operational throughout the entire year. No new equipment will be needed for the sales and administrative departments. 2019 Long-Term Debt Information A long-term debt repayment (principal only) will be made on December 31, 2019 for $275,000. The interest rate charged on the debt balance throughout 2019 will be 8% and will be paid on December 31, 2019 If an additional machine is purchased, $5,000 will be paid in cash and the remaining $30,000 will be financed at the 8% rate. The same proportion of cash/additional debt will be applied to all additional equipment purchased during 2019. Again, any purchases will be made on January 1, 2019 Dividend Policy Paulson Paint, Inc. policy is to pay dividends on the last day of each quarter. The total anticipated dividends for 2019 are $2.75 per share. Other Information Unless otherwise noted, information will remain unchanged from 2018 to 2019. 2018 Income Statement and Balance Sheet Paulson Paint, Inc. Income Statement Year Ended December 31, 2018 Sales $11,482,600 Cost of Goods Sold $9, 192,947 Gross Margin $2,289,653 Selling Expenses $603,339 Administrative Expenses $387,056 $990,395 Operating Income $1,299,258 Interest Expense $96,440 Income Before Income Tax $1,202,818 Income Tax $240,564 Net Income $962,254Pciulson Point, Inc. Balance Sheet December 31, 2018 Assets Cash $190,000 Accounts Receivable $357,000 InventoryRaw Materials $412,000 Inventory-Finished Goods $564,350 Plant and Equipment $1,955,000 Less Accumulated Depreciation {$330,000} Total Assets $3,343,350 Liabilities Accounts Payable $395,520 Accrued Wages $32,500 Accrued Other $71,220 LongTerm Debt $1,230,000 Total Liabilities $1 ,779,340 Stockholders Equity Common Stock, 35 per value $450,000 Additional PaidIn Capital $634,430 Retained Earnings $435,030 Total Stockholders: Equity $1,569,510 Total Liabilities and Stockholders: Equity $3,343,350 2019 Sales Department Information The Sales Department consists of 10 representatives who report directly to the president. Each individual is on a salary plus commission, and the sales reps also submit meal and entertainment expenses for reimbursement. (In 2018, the meal and entertainment expenses were limited to $50 per week per sales representative based upon a 52-week year.) The following information is available regarding the actual selling costs incurred for 2018. Variable Fixed Commissions $.40 per gallon sold Salaries $20,000 per sales representative Fringe Benefits 25% of commissions 25% of salaries Health Benefits $1,800 per sales representative Advertising $10 per 100 gallons sold Meals and Entertainment $50 per week per representative Depreciation $8,000 It is felt that the company will not need any additional sales representatives for 2019. It is expected that the following changes will occur in 2019. Variable Fixed Commissions No change Salaries No change Fringe Benefits No change No change Health Benefits Increase $250 per representative Advertising $12 per 100 gallons sold Meals and Entertainment $60 per week per representative Depreciation No change