You are the CEO of RPN Co., Ltd. and your team has prepared a budget for 2023 by quarter as shown in the following sheets. Discuss how you think about the proposed budget and the performance of the company. What can you suggest to improve both the business operations and the budgeting? (25 points)
Information about budget
Information about COGS
Information about Income Statement
Information about Balance Sheet
RPN Co., Ltd. Cost of Goods Sold Budget For the Year Ended December 2023 \begin{tabular}{|l|rr|} \hline Beginning finished goods inventory & $ & 58,320 \\ \hline Add: Direct materials & & \\ \hline Beginning raw materials inventory & $ & 40,000 \\ Add: Raw materials purchased & $ & 404,200 \\ Less: Ending raw materials inventory & $ & 44,800 \\ Raw materials used in production & $ & 399,400 \\ Add: Direct labor & $ & 798,800 \\ Add: Mfg. overhead (\$3 / DLH) & $ & 239,640 \\ Cost of goods manufactured & $1,437,840 \\ Ending finished goods inventory & $ & 84,240 \\ \hline Cost of goods sold & $ & 1,411,920 \\ \hline \end{tabular} RPN Co., Ltd. Budgeted Income Statement For the Year Ended December 31, 2023 Budgeted sales in units \$ 38,500.00 Total budgeted sales $3,080,000.00 Cost of goods sold Gross margin $1,668,080.00 Selling expenses $530,440.00 Excess profit $1,137,640.00 Less: Fixed expenses Manufacturing overhead $444,600.00 Selling expenses $530,400.00 Admin. Expenses $295,992.00 Total fixed expenses $1,270,992.00 Operating profit $(133,352.00) Less: Interest expense $2,227.00 Pretax profit $(135,579.00) Less: Taxes (assumed) \$ $(47,452.65) Net profit $(88,126.35) Budget COGS IncomeStatement BalanceSheet RPN Co., Ltd. Budgeted Balance Sheet As of December 31, 2023 Assets: \begin{tabular}{|l|l|} \hline Cash & $(36,592.00) \\ \hline Accounts receivable & $384,000.00 \\ \hline Inventory & $84,240.00 \\ \hline Total current assets & $431,648.00 \\ \hline Other assets & $558,585.65 \\ \hline Total assets & $990,233.65 \end{tabular} Liabilities and Stockholders' Equity \begin{tabular}{|l|l} \hline Accounts payable & $39,180.00 \\ \hline Total liabilities & $39,180.00 \\ \hline Common stock & $1,000,000.00 \\ \hline Retained earnings & $(88,126.35) \\ \hline Total liabilities and stockholders' equity & $990,233.65 \\ \hline \end{tabular} RPN Co., Ltd. Cost of Goods Sold Budget For the Year Ended December 2023 \begin{tabular}{|l|rr|} \hline Beginning finished goods inventory & $ & 58,320 \\ \hline Add: Direct materials & & \\ \hline Beginning raw materials inventory & $ & 40,000 \\ Add: Raw materials purchased & $ & 404,200 \\ Less: Ending raw materials inventory & $ & 44,800 \\ Raw materials used in production & $ & 399,400 \\ Add: Direct labor & $ & 798,800 \\ Add: Mfg. overhead (\$3 / DLH) & $ & 239,640 \\ Cost of goods manufactured & $1,437,840 \\ Ending finished goods inventory & $ & 84,240 \\ \hline Cost of goods sold & $ & 1,411,920 \\ \hline \end{tabular} RPN Co., Ltd. Budgeted Income Statement For the Year Ended December 31, 2023 Budgeted sales in units \$ 38,500.00 Total budgeted sales $3,080,000.00 Cost of goods sold Gross margin $1,668,080.00 Selling expenses $530,440.00 Excess profit $1,137,640.00 Less: Fixed expenses Manufacturing overhead $444,600.00 Selling expenses $530,400.00 Admin. Expenses $295,992.00 Total fixed expenses $1,270,992.00 Operating profit $(133,352.00) Less: Interest expense $2,227.00 Pretax profit $(135,579.00) Less: Taxes (assumed) \$ $(47,452.65) Net profit $(88,126.35) Budget COGS IncomeStatement BalanceSheet RPN Co., Ltd. Budgeted Balance Sheet As of December 31, 2023 Assets: \begin{tabular}{|l|l|} \hline Cash & $(36,592.00) \\ \hline Accounts receivable & $384,000.00 \\ \hline Inventory & $84,240.00 \\ \hline Total current assets & $431,648.00 \\ \hline Other assets & $558,585.65 \\ \hline Total assets & $990,233.65 \end{tabular} Liabilities and Stockholders' Equity \begin{tabular}{|l|l} \hline Accounts payable & $39,180.00 \\ \hline Total liabilities & $39,180.00 \\ \hline Common stock & $1,000,000.00 \\ \hline Retained earnings & $(88,126.35) \\ \hline Total liabilities and stockholders' equity & $990,233.65 \\ \hline \end{tabular}
