Prepare an operational budget for the next financial year using the Profit and Loss statement for the year just past. 

Use the following assumptions:

1. Cartage and freight are 10% of income.
2. Cost of sales is 20% of income.
3. You only employ casual staff for production and wages per product are 20% of income for that product.
4. Wages on cost (superannuation, payroll tax, workcover etc) is 15% of production and management salaries.
5. Product 1 will decrease in sales from 1 January by 20%.
6. Product 2 will decrease in sales from 1 January by 10%.
7. Product 3 will increase in sales in sales from 1 July by 30%.
8. Product 4 will increase in sales from 1 January by 50%.

XYZcom

Profit and loss

1st July 20xx to 30 June 20xx+1

	Jul	Aug	Sep	Oct	Nov	Dec	Jan	Feb	Mar	Apr	May	Jun	Total
Income
Product 1	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000	$60,000
Product 2	$10,000	$10,000	$10,000	$10,000	$10,000	$10,000	$10,000	$10,000	$10,000	$10,000	$10,000	$10,000	$120,000
Product 3	$8,000	$8,000	$8,000	$8,000	$8,000	$8,000	$8,000	$8,000	$8,000	$8,000	$8,000	$8,000	$96,000
Product 4	$20,000	$20,000	$20,000	$20,000	$20,000	$20,000	$20,000	$20,000	$20,000	$20,000	$20,000	$20,000	$240,000
Total Income	$43,000	$43,000	$43,000	$43,000	$43,000	$43,000	$43,000	$43,000	$43,000	$43,000	$43,000	$43,000	$516,000
Cost of sales
Product 1	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$12,000
Product 2	$2,000	$2,000	$2,000	$2,000	$2,000	$2,000	$2,000	$2,000	$2,000	$2,000	$2,000	$2,000	$24,000
Product 3	$1,600	$1,600	$1,600	$1,600	$1,600	$1,600	$1,600	$1,600	$1,600	$1,600	$1,600	$1,600	$19,200
Product 4	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$48,000
Total Cost of sales	$8,600	$8,600	$8,600	$8,600	$8,600	$8,600	$8,600	$8,600	$8,600	$8,600	$8,600	$8,600	$103,200
Gross Profit	$34,400	$34,400	$34,400	$34,400	$34,400	$34,400	$34,400	$34,400	$34,400	$34,400	$34,400	$34,400	$412,800
Expenses
Fixed costs
Cleaning	$500	$500	$500	$500	$500	$500	$500	$500	$500	$500	$500	$500	$6,000
Bank fees	$250	$250	$250	$250	$250	$250	$250	$250	$250	$250	$250	$250	$3,000
Insurance	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$12,000
Rent	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000	$5,000	$60,000
Electricity & gas	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$12,000
Printing, stationery, office	$200	$200	$200	$200	$200	$200	$200	$200	$200	$200	$200	$200	$2,400
Salaries management	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$48,000
Variable costs
Cartage & freight	$4,300	$4,300	$4,300	$4,300	$4,300	$4,300	$4,300	$4,300	$4,300	$4,300	$4,300	$4,300	$51,600
Salary and wage on costs	$1,890	$1,890	$1,890	$1,890	$1,890	$1,890	$1,890	$1,890	$1,890	$1,890	$1,890	$1,890	$22,680
Wages product 1	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$1,000	$12,000
Wages product 2	$2,000	$2,000	$2,000	$2,000	$2,000	$2,000	$2,000	$2,000	$2,000	$2,000	$2,000	$2,000	$24,000
Wages product 3	$1,600	$1,600	$1,600	$1,600	$1,600	$1,600	$1,600	$1,600	$1,600	$1,600	$1,600	$1,600	$19,200
Wages product 4	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$4,000	$48,000
Total Expenses	$26,740	$26,740	$26,740	$26,740	$26,740	$26,740	$26,740	$26,740	$26,740	$26,740	$26,740	$26,740	$320,880
Operating Profit	$7,660	$7,660	$7,660	$7,660	$7,660	$7,660	$7,660	$7,660	$7,660	$7,660	$7,660	$7,660	$91,920

Answer rating: 100% (QA)

To prepare an operational budget for the next financial year well use the Profit and Loss statement ... View the full answer