Task 1

Below you are provided with details of two companies and their budgets. Prepare the budgets and complete the following tasks:

From the following information relating to Marmax Consulting Services, prepare budgeted Income Statement (Budget 1) for the period from January to December 2020, showing the profit level required by management.

The fees budget shows a budgeted level of 1000 consultancy hours per month at $100 per hour, of which the hourly rate has been set at a budgeted level at least 10% lower than the average market rate in the industry.

Expenses are as follows:

• Advertising is a fixed amount of $4,500 per annum plus 1.25 per cent of fees
• Office wages $2,000 per month
• Office supplies is fixed amount of $2,100 per annum plus 10 cents per consultancy hour
• Staff salaries $8,500 per month
• Staff commission 4 per cent of fees
• Vehicle expenses $15,300 per annum plus0.25 per cent of fees
• Interest expense 15.5 per cent per annum of a loan of $20,000
• Legal fees $1,000 per month plus 0.7 per cent of fees.
• Rates $12,900 per annum
• Income tax 33 cents in the dollar
• Fixed costs include:Office wages; Staff salaries; Rates.

Question 1 - Write formal short report for the General Manager of Marmax Consulting Services on the performance of the actual budget. The report must be provided to the General Manager within one month of the close of End of Year. (Note: Follow the Oliver Trading short report format in Supplementary Resources).