Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PREPARE THE INCOME STATEMENT Financial assumptions: 1. The value of the total direct materials (cooking ingredients) increases 12% per year 2. For the rental, a

PREPARE THE INCOME STATEMENT

Financial assumptions:

1. The value of the total direct materials (cooking ingredients) increases 12% per year

2. For the rental, a 5% increase per year

3. There will be no increased rate for the baking supplies

4. Cost for Overhead/utilities will increase 50% every year

5. Salaries for the Baker increase 15% each year, 10% for Assistant baker, 3% increase for the Head Manager, and 5% increase for the cashier, dishwasher, and cleaner.

6. Sanitation permit is needed for the business. It will be paid every year with a 13% increase rate.

7. During the launching of the product, the business will provide a coupon for every customer buying at least one box of Creamansi-Puff. A marketing strategy that will make the customers visit often for a discount or freebies.

8. Holidays and events such as Christmas, Valentine's, and Anniversary, 3,000 will be the projected cost for at least 1-month celebration for every event. This includes freebies, discounts, or a buy 1 take 1 promo. As the sales increase, it is said that the cost for this will have an increase rate by 25%.

9. Graphic design for advertisement will cost 45 pesos for 1 month and business needs to boost their posts on any social media platforms to reach more potential buyers, which will cost 1,500 each year.

10. Business and baking supplies are calculated for a 1-year use only.

11. Transportation costs 48,000 per year and does not increase for 5 years.

12. Packaging expense for the product does not increase its price for 5 years, however, it is being estimated by the number of units of production.

13. Depreciation expenses are computed in a straight-line base with an estimated useful life of 5 years.

14. Projected sales are computed by multiplying the total gap by the product's price.

15. Contribution margin increases to 10%

16. Each partner (6 members) of the business has a 50,000 contribution for five years

17. Income tax is calculated by multiplying the below 100 million income tax by 20% and 25% if below the said value.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Cost Accounting

Authors: William Lanen, Shannon Anderson, Michael Maher

5th edition

978-1259728877, 1259728870, 978-1259565403

Students also viewed these Accounting questions