Question

INTEROFFICEMEMO

Papa ManufacturingCompany

Date:

December 06, 2016

To:

Dallas Saycocie

Department Manager

From:

Terry G . Reese, CMA, CFM

Chief Financial Officer

Subject:

2017 Budget

You have beentasked with the preparation of the 2017 annual budget. Thepertinent information you will need to complete the budget ispresented below. I will need your budget numbers no later than 4:00PM on December 15th.

Projected 2016 Sales:

400,000,000

Anticipated increase in Sales:

4%

2017 Unit Selling Price:

20,000

2017 Materials Cost per Unit:

12,000

Estimated Units on Hand as of12/31/16:

250

Desired Units on Hand at 12/31/17:

270

Historical Percentage ofSales by Month

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

6%

6%

10%

6%

6%

10%

6%

6%

10%

10%

11%

13%

Assumed Direct Labor costs asa percentage of Sales:

25%

Monthly Indirect Labor:

105,000

Payroll Tax Percentage:

10%

Workers CompensationInsurance:

3%

of Direct Labor

General LiabilityInsurance:

2%

of Sales

Monthly Factory Rent:

30,000

Monthy rent increase beginning 4/1/17:

500

Monthly TelecommunicationsExpense:

10,000

Monthly AdvertisingCosts:

2,500

Monthly Depreciation Expense:

95,000

Monthly Utilities Expense isestimated at $1,000 plus

0.25%

of Sales

Estimated 2017 tax rate:

35%

Be sure to round all of your budget estimates to the nearestdollar.

Please fill in these charts

Production Budget

	JAN	FEB	MAR	APR	MAY	JUN	JUL	AUG	SEP	OCT	NOV	DEC	Total
Minimum required units on hand	50	50	50	50	50	50	50	50	50	50	50	50
Beginning Units on hand	250	250	250	250	250	250	250	250	250	250	250	250
Units Produced
Less Units Sold
Ending Units on Hand	250	250	250	250	250	250	250	250	250	250	250	250

Configure Budget

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Total

Sales

Direct Cost

Cost of goods sold

Direct Labor

Payroll Taxes

Workers Compensation Insurance

Factory Rent

Total Direct Cost

Gross Profit

Sales, General & Administrative Expenses

Advertising Expenses

Indirect Labor

Payroll taxes

General Liability insurances

Telecommunication expenses

Utility expenses

Depreciation

Total SG&A Expenses

Income Before taxes

income tax

net income