Question: Plenair Inc is located in France and organizes and coordinates

Plenair, Inc., is located in France and organizes and coordinates art shows and auctions throughout the world. Its budgeted and actual costs for last year follow.

Because the company sells only services, there is no cost of goods sold (net receipts equal gross margin). Plenair has budgeted the following fixed costs for the coming year: salaries, €1,000,000; advertising expense, €190,000; insurance, €150,000; and space rental costs, €300,000.
Additional information:
a. Net receipts are estimated at €6,400,000.
b. Travel costs are expected to be 11 percent of net receipts.
c. Auctioneer services will be billed at 15 percent of net receipts.
d. Printing costs are expected to be €190,000.
e. Home office costs are budgeted for €30,000.
f. Shipping costs are expected to be 20 percent higher than the €105,000 budgeted in the last year.
g. Miscellaneous expenses for the coming year will be budgeted at €8,000.
1. Prepare the company’s budgeted income statement for the coming year using a 40 percent income tax rate,
2. Should the budget committee be worried about the trend in the company’s operations? Explain youranswer.

Sale on SolutionInn
  • CreatedMarch 26, 2014
  • Files Included
Post your question