Question
Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four
Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow:
Historically, cost of goods sold is about 50 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue.
Fred Arvada, the chief executive officer, told Mr. Long that he expected sales next year to be 10 percent for each respective quarter above last years level. However, Rita Banks, the vice president of sales, told Mr. Long that she believed sales growth would be only 5 percent.
First Quarter $186,000 Third Fourth Quarter Second Quarter $216,000 108,000 Total Quarter $226,000 93,000 0113,000 Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income $904,000 113,0001384000 452,000 90,400 $361,600 $276,000 138,000 4521000_ 93,000108,000 21,60022 600 22,600 $90,400 18,600 $74,400 27,600 $ 86,400 $110,400 Total First Quarter Second Quarter Third Quarter Fourth Quarter Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income First Quarter Second Quarter Third Quarter Fourth Quarter Total Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net incomeStep by Step Solution
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