Prepare the operating forecasts for 2020 and 2021 using the 2019 percent of sales method. (Fill in the blanks) FCT 2021 1,750,000 20% Forecast 350,000 Actual 2019 FCT 2020 Industry Market share 1,000,000 20% 1,500,000 20% Forecast 300,000 % of sales 200,000 50,000 70,000 Sales Material 25.00% La bour 35.00% 105,000 122,500 Factory Overhead COGS 40,000 160,000 40,000 10,000 20,000 10,000 20.00% 80.00% Gross Profit 20.00% 5.00% Selling Corporate Overhead Operating Profit (op) Taxes (% of OP) 10.00% 5.00% 25.00% 2,500 7,500 Net Income 3.75% % sales Cash 10,000 40,000 5.00% Accounts Receiva ble Inventory Fixed assets 20.00% 10.00% 20,000 200,000 100.00% Total 270,000 Accounts Payable 10.00% 20,000 Debt Plug to Balance Fixed 120,000 120,000 2,500 Common Stock 120,000 120000 Opening RE 10,000 21,250 Net Income 7,500 270,000 Total 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?