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based on this The actual results for 2020 come in at $110,000 for labour costs. What are two things would you investigate regarding the unfavourable
based on this
The actual results for 2020 come in at $110,000 for labour costs. What are two things would you investigate regarding the unfavourable labour results
| Prepration Operating Budget forecast for 2020 and 2021 | ||||
| Actual 2019 | FCT 2020 | FCT 2021 | ||
| Industry Market Share | 10,00,000.00 20% | 15,00,000.00 20% | 17,50,000.00 20% | |
| % of Sale | ||||
| Sales | 2,00,000.00 | 3,00,000.00 | 3,50,000.00 | |
| Material | 25% | 50,000.00 | 75,000.00 | 87,500.00 |
| Labour | 35% | 70,000.00 | 1,05,000.00 | 1,22,500.00 |
| Factory Overhead | 20% | 40,000.00 | 60,000.00 | 70,000.00 |
| 80% | 1,60,000.00 | 2,40,000.00 | 2,80,000.00 | |
| Gross Profit | 20% | 40,000.00 | 60,000.00 | 70,000.00 |
| Selling | 5% | 10,000.00 | 15,000.00 | 17,500.00 |
| Corporate Overhead | 10% | 20,000.00 | 30,000.00 | 35,000.00 |
| Operating Profit(OP) | 5% | 10,000.00 | 15,000.00 | 17,500.00 |
| Taxes(% of OP) | 25% | 2,500.00 | 3,750.00 | 4,375.00 |
| Net Income | 3.75% | 7,500.00 | 11,250.00 | 13,125.00 |
| % of Sale | ||||
| Cash | 5.00% | 10,000.00 | 15,000.00 | 17,500.00 |
| Accounts Receivable | 20.00% | 40,000.00 | 60,000.00 | 70,000.00 |
| Inventory | 10.00% | 20,000.00 | 30,000.00 | 35,000.00 |
| Fixed Assets | 100.00% | 2,00,000.00 | 3,00,000.00 | 3,50,000.00 |
| Total | 2,70,000.00 | 4,05,000.00 | 4,72,500.00 | |
| Account Payable | 10% | 20,000.00 | 30,000.00 | 35,000.00 |
| Debt | Plug to Balance | 1,20,000.00 | 2,33,750.00 | 2,83,125.00 |
| Common Stock | Fixed | 1,20,000.00 | 1,20,000.00 | 1,20,000.00 |
| Opening RE | 2,500.00 | 10,000.00 | 21,250.00 | |
| Net Income | 7,500.00 | 11,250.00 | 13,125.00 | |
| Total | 2,70,000.00 | 4,05,000.00 | 4,72,500.00 | |
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Intermediate Financial Management
Authors: Eugene F. Brigham, Phillip R. Daves
11th edition
978-1111530266
