Question
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
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
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