Question

a new two contract for the building was signed with a 10.00% increase from the prior year
insurance expenses will hold steady due to contract agreement
travel/entertainment will be reduced by 7.00% from prior year
new equipment was purchased in the current year causing a 22.00% increase in depreciation
30% of the payroll cost will increase/decrease based upon the trend; 70% of the payroll will increase by 25.00%
due to anticipated new hires causing contract labor to decrease by 30.00%
all the new hires will cause training expenses to increase by 11.00%

	2014	2015	2016
Sales Revenue	9,800,000	10,780,000	12,397,000
Cost of Goods Sold	6,018,000	6,318,900	6,950,790
Gross Margin	3,782,000	4,461,100	5,446,210

Operating Expenses
Payroll Expenses	1,336,000	1,362,720	1,417,229
Building Expenses	284,800	284,800	284,800
Office Expenses	355,200	337,440	303,696
Advertising Expenses	844,800	1,056,000	1,320,000
Insurance Expenses	299,200	299,200	299,200
Contract Labor Expenses	149,600	127,160	95,370
Travel/Entertainment Expenses	89,500	90,395	91,299
Training Expenses	44,000	41,800	39,710
Service Charges Expenses	13,000	13,000	13,650
Dues/Licenses Expenses	9,800	9,800	9,800
Depreciation Expenses	52,450	49,828	47,336
Total Operating Expenses	3,478,350	3,672,143	3,922,090
Net Income	303,650	788,958	1,524,120
Based upon the assumptions listed above and using trend analysis for the
remainder of the accounts, create a budget for 2017.

Answer 1

Budgeted Income statement
For the year 2017
Sales Revenue	13636700
Cost of goods sold	7298330
Gross Margin	6338370
Operating Expenses:
Payroll Expense	1690753
Building Expenses	284800
Office Expenses	349250
Advertising Expenses	1650000
Insurance Expenses	299200
Contract Labor Expenses	66759
Travel/Entertainment Expenses	84908
Training Expenses	44078
Service Charges Expenses	13650
Dues/Licenses Expenses	9800
Depreciation Expenses	57750
Total Operating Expenses	4550948
Net Income	1787422

Calculations:

Sales Revenue =12,397,000+10%

13636700

Insurance Expenses

299200

Travel/Entertainment Expenses = 91299-7%

84908

Depreciation = 47336+22%

57750

Payroll cost:
Trend	[(1362720-1336000)/1336000]x100 = 2%	(1417229-1362720)/1362720 = 4%
For 30%	(1417229)x30%+6%	450678
For 70%	(1417229x70%)+25%	1240075
Total		1690753

Contract labor = 95,370 - 30%(95,370)

66759

Training Expense = 39,710 + 11%

44078

	2014	2015	2016	2017
Sales	9800000	10780000	12397000	13636700
Difference		980000	1617000	1239700
Trend		10%	15%	10%
Cost of goods sold	6018000	6318900	6950790	7298330
Difference		300900	631890	347540
Trend		5%	10%	5%

Office Expenses	355200	337440	303696	349250
Difference		17760	33744	45554
Trend		5%	10%	15%