What is the total budgeted fixed operating expense? (Use the following data to answer this question)
Question 8 options:
Income Statement (3/31/2015) Account Earnings 10,000,000 100.00 Cost of Construction Labor 1.600.000 16.00 4.000.000 40.00 Material Subcontracts 3,200,000 32.00 200,000 2.00 Other Direct Cost (JOH) 9.000.000 90.00 Total Direct Cost Gross Profit 1,000,000 10.00 Operating Expense Variable Operating Expense 150,000 1.50 Auto and Truck Communications 60,000 0.60 Interest Work in progress) 100,000 1.00 237000 2.37 Insurance Work in progress 20,000 0.20 Other Variable Expense Total Variable Operating Expense 567.000 5.67 Fixed Operating Expense SL000 0.05 Contributions 72,000 0.72 Depreciation (Equipment) 3.000 0.03 Depreciation (Building) 29000 029 Insurance Equipment. 20,000 0.20 Interest Equipment Rent 44,000 0.44 300,000 00 Salaries Other Fixed Expense 10,000 010 Total Fixed Operating Exp 4.83 1.050.000 10.50 Total Operating Expense ES0,000 -0.30 Net Profit (before tax) Other Budget Data for 2016 1. The owners expect a minimum return on investment (before tax of 27.78% for 2016 2. Anticipated increase in fixed operating expense includes S1,000 to contribution, $2,000 to rent $5,000 to auto and truck insurance, S45,000 to salaries, and $2,000 to other fixed cost 3. Material cost is expected to decrease as vendors try to liquidate stock built during the earlier construction boom. The cost decrease should result in a decrease in relationship to revenue in the amount of 30% 4. Subcontract costs should also decrease as subcontractors scramble for work. The expected decrease in relationship to revenue is 2% 5. No other changes to cost structure Income Statement (3/31/2015) Account Earnings 10,000,000 100.00 Cost of Construction Labor 1.600.000 16.00 4.000.000 40.00 Material Subcontracts 3,200,000 32.00 200,000 2.00 Other Direct Cost (JOH) 9.000.000 90.00 Total Direct Cost Gross Profit 1,000,000 10.00 Operating Expense Variable Operating Expense 150,000 1.50 Auto and Truck Communications 60,000 0.60 Interest Work in progress) 100,000 1.00 237000 2.37 Insurance Work in progress 20,000 0.20 Other Variable Expense Total Variable Operating Expense 567.000 5.67 Fixed Operating Expense SL000 0.05 Contributions 72,000 0.72 Depreciation (Equipment) 3.000 0.03 Depreciation (Building) 29000 029 Insurance Equipment. 20,000 0.20 Interest Equipment Rent 44,000 0.44 300,000 00 Salaries Other Fixed Expense 10,000 010 Total Fixed Operating Exp 4.83 1.050.000 10.50 Total Operating Expense ES0,000 -0.30 Net Profit (before tax) Other Budget Data for 2016 1. The owners expect a minimum return on investment (before tax of 27.78% for 2016 2. Anticipated increase in fixed operating expense includes S1,000 to contribution, $2,000 to rent $5,000 to auto and truck insurance, S45,000 to salaries, and $2,000 to other fixed cost 3. Material cost is expected to decrease as vendors try to liquidate stock built during the earlier construction boom. The cost decrease should result in a decrease in relationship to revenue in the amount of 30% 4. Subcontract costs should also decrease as subcontractors scramble for work. The expected decrease in relationship to revenue is 2% 5. No other changes to cost structure
