Prepare the operating forecasts for 2020 and 2021 using the 2019 percent of sales method. (Fill in the blanks) FCT 2020 FCT 2021 Actual 2019 1000,000 Industry Market share 20% % of sales Sales 2:00,000 Material 50,000 Labour 70,000 Factory Overhead 40,000 COGS 160,000 Gross Profit 40,000 Selling 10,000 Corporate Overhead 20,000 Operating Profit (op) 10,000 Taxes (% of OP) 2,500 Net Income 7,500 Cash 10,000 Accounts Receivable 40,000 Inventory 20,000 Fixed assets 200,000 Total 270,000 Accounts Payable 20,000 Debt Plug to Balance 120,000 Fixed 120,000 120,000 12:0000 Common Stock Opening RE 2,500 10.000 21250 7,500 Net Income Total 270.000 Questions regarding top-down budget 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? 25.00% 35.00% 20.00% 80.00% 20.00% 5.00% 10.00% 5.00% 25.00% 175% 5.00% 20.00% 1000% 100.00% 10.00% % sales - . . 1,500,000 20% Forecast 300,000 105,000 1,750,000 20% 350,000 122,500 Forecast