3.5. AaBbced AaB AaBbcAaBbc WA A A Hinding 2 Heading 1 New Style Text Tous Part 2 - Top-Down Operating Budget An entity expects its sales to be $6,000,000 next year. The past year's income statement is as set out below. Using a top-down percentage of sales approach forecast the income statement for next year and answer the questions below. Fixed costs are expected to increase as the sales volumes increase Actual Last Year Sales Direct Material Costs Direct Labour Cost Variable Factory Overhead Fixed Factory Overhead Costs of Goods Sold Gross Profit Corporate Fixed Costs Operating Profit Taxes Net Income Income Statement 5,000,000 (1,000,000) (1,250,000) (750,000) (1,000,000 14,000,000) 1,000,000 (750,000) 250,000 {50,000) 200,000 100.0% 20.0% -25.0% 15.0% -20.0% 80.0% 20.0% 15.096 5.0% 1.0% 4.0M Questions (show your calculations where applicable) 1. Prepare an income statement forecast for the next year at $6,000,000 of sales. This is considered a static budget for next year 2. If the entity instead used a flexible budget approach and actual sales were $6.500.000, prepare a budget for next year. 3. If actual Director Labour Cost for next year is $1.625,000, what amount would the Human Resources Department have to explain A 3- Wall. AaBlaaBb AaBbc AA 2 2020.07.30 08:02 Part 2 - Top-Down Operating Budget An entity expects its sales to be $6,000,000 next year. The past year's income statement is as set out below. Using a top-down percentage of sales approach forecast the income statement for next year and answer the questions below. Fixed costs are expected to increase as the sales volumes increase Actual Last Year Sales Direct Material Costs Direct Labour CGT Variate Factory Owhead Fun Factory Overhead Costs of Good Sold Gross Profit Corporate Fixed Costs Operating Profit Bree Staten 5,000,000 11,000,000 (1.250,000 750,000 (1.000.000 14,000,000 1,000,000 100,0% 20.07 -250 15.0 2010 -300 2500000 150.000 200.000 SON 104 Net Income Questions (show your calculations where applicable 1. Prepare an income statement forecast for the next year at 56,000,000 of sales. This is considered a static budget for next year 2. If the entity instead used a flexible budget approach and actual sales were $6,500,000, prepare a budget for next year. 3. If actual Director Labour Cost for next year is $1.625.000, what Department have to explain F Corporate id costs Operating Profit 1.XX0,000 (750,000) 250,000 110,000) 20,000 20.0 150 50% LOX 4.0 Net Income 2020.07,30 08:02 Questions (show your calculations where applicable) 1. Prepare an income statement forecast for the next year at $6,000,000 of sales. This is considered a static budget for next year 2. If the entity instead used a flexible budget approach and actual sales were $6,500,000. prepare a budget for next year 3. If actual Director Labour Cost for next year is $1.625,000, what amount would the Human Resources Department have to explain under a a. Static Budget b. Flexible Budget 4. Sales each month under the static budget are $500,000 These sales are collected 50% in month 1 of the sale and 50% in month 2 after the sale. Monthly operating expenses are $400.000 a month and paid in the month incurred. Describe the cash flow consequences of these timing differences 5. What type of responsibility center is the Human Resources Department? O