Consider the following case scenario: Imagine you are a manager of small plastic parts manufacturing contracting business making parts under contract to electronic consumer goods industry and defense industry companies, and you are in charge of developing a projected annual operating budget.

Your budgetary figures are as follows: For the fiscal year 2019, your firm received a $3 million contract from Sony to provide small parts for its current Ultra HD Blu Ray Player, as well as various contracts totaling $1.75 million from other businesses. Xample also has an $180,000 annual contract from Boeing and a contract for small plastic parts contract from Ratheon totaling $1.6 million annually.

Your chief financial officer (CFO) has provided you with the following annual expenses:

Xample Manufacturing Expenses

Annual Salaries                                                $1.63 million

Annual Benefits                                                $ 245,000

Annual Rent                                                     $ 760,000

Annual Insurance                                             $ 45,000

Annual Depreciation                                         $ 780,000

Annual Overhead                                             $ 180,000

Annual Supplies                                                $ 96,000

Annual Raw Materials                                       $ 2.6 million

Using the Xample Manufacturing Operating Budget Template,

Xample Manufacturing

Operating Budget (2019)

	Quarter 1	Quarter 2	Quarter 3	Quarter 4	TOTAL (add across)
Revenue
Sony Contract
Boeing Contract
Ratheon Contract
Other Income
PROJECTED TOTAL INCOME
Costs and Expenses
Salaries
Benefits
Rent
Insurance
Depreciation
Overhead
Supplies
Raw Materials
PROJECTED TOTAL EXPENSES
PROJECTED NET PROFIT/(LOSS)

• Complete a 12-month operating budget in which you include the projected net profit (or loss). Turn in with the summary,

After completing the budget template, please write a two- to three-page summary including the following:

• Explain the process for creating an operating budget and its importance.
• Describe how revenues and expenses are grouped for planning and control in the financial statements.

The Case Analysis: Xample Manufacturing Annual Draft Operating Budget paper