Highjinks Corporation's sales department has estimated revenue of $2,250,000 for your division. 60% of this will be achieved in the first half-year and 40% in the remaining half-year. Variable operating costs are typically 30% of revenue and fixed operating costs are expected to be $35,000 per month for the first six months and $40,000 per month thereafter.

The selling expense allocated to your department from the sales department is $15,000 per month for the first half-year; thereafter, $12,000. Salaries are $25,000 per month, depreciation is $5,000 per month, and rent is $8,000 per month. Light, heat, and power are expected to cost $3,000 per month for the first half-year, falling to $2,000 thereafter.

a. Construct a budget for the year based on the above figures.

b. What can you say about the rate of gross profit?