Norman Jelen, the controller of Wing Corporation, is trying toprepare a sales budget for the coming year. The income statementsfor the last four quarters follow.
1st 2nd 3rd 4th total
Sales revenue $ 170,000 $ 200,000 $ 210,000 $ 260,000 $840,000
Cost of Goods sold 102,000 120,000 126,000 156,000 504,000
Gross Profit 68,000 80,000 84,000 104,000 336,000
Selling & Admin exp. 17,000 20,000 21,000 26,000 84,000
Net Income 51,000 60,000 63,000 78,000 252,000
Historically, cost of goods sold is about 60 percent of salesrevenue. Selling and administrative expenses are about 10 percentof sales revenue. Sam Wing, the chief executive officer, told Mr.Jelen that he expected sales next year to be 10 percent for eachrespective quarter above last year
1st 2nd 3rd 4th total
Sales revenue $ 170,000 $ 200,000 $ 210,000 $ 260,000 $840,000
Cost of Goods sold 102,000 120,000 126,000 156,000 504,000
Gross Profit 68,000 80,000 84,000 104,000 336,000
Selling & Admin exp. 17,000 20,000 21,000 26,000 84,000
Net Income 51,000 60,000 63,000 78,000 252,000
Historically, cost of goods sold is about 60 percent of salesrevenue. Selling and administrative expenses are about 10 percentof sales revenue. Sam Wing, the chief executive officer, told Mr.Jelen that he expected sales next year to be 10 percent for eachrespective quarter above last year
Related questions
Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow:
| First Quarter | Second Quarter | Third Quarter | FourthQuarter | Total | |
| Sales Revenue | $ 90,000 | $ 100,000 | $ 105,000 | $ 130,000 | $425,000 |
| Cost of goods sold | (54,000) | (60,000) | (63,000) | (78,000) | (255,000) |
| Gross profit | 36,000 | 40,000 | 42,000 | 52,000 | 170,000 |
| Selling & Administrating Expenses | (8,500) | 10,000 | (10,500) | (13,000) | (42,000) |
| Net income | $ 27,500 | $ 30,000 | $ 31,500 | $ 39,000 | $128,000 |
Historically, cost of goods sold is about 60 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue. Fred Arvada, the chief executive officer, told Mr. Long that he expected sales next year to be 8 percent for each respective quarter above last yearâs level. However, Rita Banks, the vice president of sales, told Mr. Long that she believed sales growth would be only 5 percent.
Required:
1) Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvadaâs estimate.
2) Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banksâ estimate.
