Prepare the operating forecasts for 2020 and 2021 using the 2019 percent of sales method. (Fill in the blanks) Actual 2019 FCT 2020 FCT 2021 1,000,000 1,750,000 1,500,000 20% Industry 20% 20% Market share % of sales Forecast Forecast 300,000 350,000 200,000 50,000 70,000 Sales Material 25.00% Labour 35.00% 105,000 122,500 40,000 160,000 Factory Overhead 20.00% COGS 80.00% Gross Profit 20.00% 40,000 Selling Corporate Overhead 5.00% 10,000 10.00% 20,000 Operating Profit (op) Taxes (% of OP) 10,000 2,500 5.00% 25.00% Net Income 3.75% 7,500 % sales Cash 5.00% 10,000 Accounts Receivable 20.00% 40,000 Inventory 10.00% 20,000 Fixed assets 100.00% 200,000 Total 270,000 Accounts Payable 10.00% 20,000 120,000 120,000 Debt Plug to Balance Common Stock Fixed 120,000 120000 Font 120,000 120,000 2,500 7,500 Plug to Balance Fixed Debt 120000 120,000 10,000 Common Stock 21,250 Opening RE Net Income Total 270,000 Questions regarding top-down budget 1. Prepare the forecasts for 2020 and 2021. Note: the 2020 actuals are not complete yet and the CFO needs an estimate to show the CEO. 2. The company uses a job cost system and has specialized labour for its jobs. The Human Resources department has done a great job recruiting talent for each job but there is a lot of competition for this labour. The forecast above is the best guess of what it will cost to attract and retain talent. What type of cost are labour costs in the forecast. If this cost reduces the contribution margin, what happens to break-even sales? 3. What are two benefits of preparing the forecasts or budgets? 4. What is included in a master budget and who may use it? 5. What are two examples of why cash levels can be different than net income for a year? 3.