12 Styles Editing 12:34 5.6 Question B - Top-Down Operating Budget (15 marks) Prepare the operating forecasts for 2020 and 2021 using the 2019 percent of sales method (Fill in the blanks) Industry Market share Actual 2019 1,000,000 ZON FCT 2021 1,750JDOO FCT 2020 1.50TDOO 2012 Forecast 300.000 2015 Sofies Sales Forecast 350.000 105.000 122.500 Maten Labour Factory Overhead COGS Gas Profit Seling Corporate Overhead Operating Profilop Taxes (of O Net Income 25.00% 35 DOS 20.00 80.00% 20.00% 5.00% 10.00 SOON 25.00% 3.75 200.000 50.000 70.000 40,000 150,000 40.000 10.000 20.000 19000 2500 7.500 Accounts Recenable Inventory Fored assets Total sales 5.00% 20100 10.00 100.OON 16.000 40,000 20.000 200,000 270.000 Accounts Payable Debt Common Stock Opening we Net Income 10.00% Plug to Balance Fixed 120000 20.000 120,000 120,000 2.300 7.300 270.000 120.000 10,000 Questions 1. Prepare the forecasts for 2020 and 2021. Note the 2020 actuals are not complete yet and the CFO needs an estimate to show the CEO 2. The company uses a job cost system and has specialized labour for its jobs. The Human Resources department has done a great job recruiting talent for each job but there is a lot of competition for this labour. The forecast above is the best guess of what it will cost to attract and retain talent. What type of cost are labour costs in the forecast. If this cost reduces the contribution margin, what happens to break even sales? 3. What are two benefits of preparing the forecasts or budgets? 4. What is included in a master budget and who may use it? 5. What are two examples of why cash levels can be different than net income for a year