The accompanying Excel spreadsheet summarizes historical income statement performance for Company XYZ. Utilizing the historical information provided and the assumptions outlined below, prepare a budget for the upcoming fiscal year and a projection for the following year. In other words, you should have budgets for two years.

Additional Historical Information

Total number of FTEs (full-time equivalent) employees was 14.4. The Board of Directors approves salary increases each year. Fringe benefits have not increased over the past few years; however, information suggests that this is not a trend that will continue. Total net fixed assets for the organization were $2,500,000 in prior year 1 and $2,600,000 in prior year 2.

Assumptions for Budget Year 1

Management has requested an increase in FTEs of 2.5. Salary increases will be given at 2.5%. Fringe benefits as a % of total salaries are anticipated to increase 2%. Inflation for all non-salary expenses is projected to be 2.5%. Capital purchases for the budget year are projected to be $300,000. Sales are projected to increase 2.5%. Other operating revenue is projected to increase $25,000.

Assumptions for Budget Year 2

Management has requested an increase in FTEs of 1.5. Salary increases will be given at 1.5%. Fringe benefits as a % of total salaries are anticipated to increase 1%. Inflation for all non-salary expenses is projected to be 1.5%. Capital purchases for the budget year are projected to be $150,000. Sales are projected to increase 3%. Other operating revenue is projected to increase $25,000.

As for fringe benefits, you can just look at year 1 and year 2, calculate the percentage of fringe benefits and use that number. I believe it is exactly 25% for both year 1 and year 2.

As for depreciation, the project does not tell you how to calculate it, so here is an easy way for the project which I will accept.

Use straight line depreciation for 10 years and a 20% residual value. Use this for both of the capital expenditures.

First budget year's capital expenditures.

$300,000 * 20% = $60,000 (residual value)

Therefore, depreciate $240,000. So, each year for 10 years is $24,000

Company XYZ Hictnriral Inromo Ctatomont Additional Historical Information - Total number of FTEs (full-time equivalent employees) were 14.4. - The Board of Directors approves salary increases each year. - Fringe benefits have not increased over the past few years; however, information suggests that this is not a trend that will continue. - Total net fixed assets for the organization were $2,500,000 in prior year 1 and $2,600,000 in prior year 2 . Assumptions for Budget Year 1 - Management has requested an increase in FTEs of 2.5 . - Salary increases will be given at 2.5%. - Fringe benefits as a % of total salaries are anticipated to increase 2%. - Inflation for all non-salary expenses is projected to be 2.5%. - Capital purchases for the budget year are projected to be $300,000. - Sales are projected to increase 2.5%. - Other operating revenue is projected to increase $25,000. Assumptions for Budget Year 2 - Management has requested an increase in FTEs of 1.5. - Salary increases will be given at 1.5%. - Fringe benefits as a % of total salaries are anticipated to increase 1%. - Inflation for all non-salary expenses is projected to be 1.5%. - Capital purchases for the budget year are projected to be $150,000. - Sales are projected to increase 3%. - Other operating revenue is projected to increase $25,000