Below is the budgeted income for Satchmo Incorporated for the upcomin.pdf
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Below is the budgeted income for Satchmo Incorporated for the upcoming year including information on machine hours (MH) and sales volume, in units, by product. Management is concerned with the budgeted performance of Product D. Included in the fixed costs assigned to each product line are common fixed costs of $150,000 that are allocated to the products by machine hours. These costs are expected to stay at $150,000 regardless of the firm's decisions on production. The remaining fixed costs assigned to each product are direct fixed costs that can be avoided by dropping a product line. Required (Show and label your work in a professional manner.) 1. By how much will income increase or decrease if the firm drops Product D ? 2. Assume the budgeted 50,000MH is the firm's capacity production. Demand for the firm's products is such that sales of any of the products could be increased by up to 20%. At the prevailing prices. If the firm were to drop product D and increase sales of the other three products. - By how much should the firm increase production of each product: Product A, Product B and Product C? - What income level will the firm achieve by dropping Product D and increasing the level of sales for the other products, according to your calculations?.
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Income statement definition
An income statement is a financial statement that reports a company's financial performance over a specific accounting period. It is one of the three important financial statements used for reporting a company’s financial performance, the other two being the balance sheet and the cash flow statement. The income statement focuses on the revenue, and expenses reported by a company during a particular period. It provides valuable insights into a company’s operations, the efficiency of its management, underperforming sectors, and its performance relative to industry peers.
The income statement is also known as the profit and loss (P&L) statement or the statement of revenue and expense. It starts with the details of sales and then works down to compute net income and eventually earnings per share (EPS). The income statement does not differentiate between cash and non-cash receipts (sales in cash vs. sales on credit) or cash vs. non-cash payments/disbursements (purchases in cash vs. purchases on credit).
Key income statement items
Revenue is the total amount of money a company earns from its operations, usually from the sale of goods or services. For example, a car manufacturer’s revenue would be the total amount of money it earns from selling cars.
Cost of Goods Sold (COGS) represents the direct costs associated with producing or delivering the goods or services sold by a company. In the auto industry, COGS would include the cost of raw materials, labor, and other expenses directly related to manufacturing vehicles.
Gross Profit is calculated by subtracting the COGS from the revenue.
Selling, General, and Administrative (SG&A) expenses represents the costs associated with a company's non-production activities, such as sales, marketing, and administrative functions. In the auto industry, SG&A expenses would include salaries of sales personnel, advertising expenses, rent for office spaces, and other costs related to running the business.
Depreciation & Amortization: Depreciation refers to the systematic allocation of the cost of a tangible asset over its useful life. Amortization, on the other hand, is the process of spreading out the cost of an intangible asset over its useful life. In the auto industry, depreciation and amortization expenses would include the depreciation of manufacturing equipment, vehicles, and amortization of patents or trademarks.
Interest Expenses represents the costs associated with borrowing money or using credit facilities. Interest expenses are incurred when a company has outstanding debt or loans. In the auto industry, interest expenses would include interest paid on loans used to finance manufacturing facilities or purchase equipment.
This PowerPoint presentation is only a small preview of our Toolkits. For more details, visit www.domontconsulting.comCreating an Income Statement with Forecasts: A Simple Guide and Free Excel Te...
Creating an Income Statement with Forecasts: A Simple Guide and Free Excel Te...Aurelien Domont, MBA
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Income statement definition
An income statement is a financial statement that reports a company's financial performance over a specific accounting period. It is one of the three important financial statements used for reporting a company’s financial performance, the other two being the balance sheet and the cash flow statement. The income statement focuses on the revenue, and expenses reported by a company during a particular period. It provides valuable insights into a company’s operations, the efficiency of its management, underperforming sectors, and its performance relative to industry peers.
The income statement is also known as the profit and loss (P&L) statement or the statement of revenue and expense. It starts with the details of sales and then works down to compute net income and eventually earnings per share (EPS). The income statement does not differentiate between cash and non-cash receipts (sales in cash vs. sales on credit) or cash vs. non-cash payments/disbursements (purchases in cash vs. purchases on credit).
Key income statement items
Revenue is the total amount of money a company earns from its operations, usually from the sale of goods or services. For example, a car manufacturer’s revenue would be the total amount of money it earns from selling cars.
Cost of Goods Sold (COGS) represents the direct costs associated with producing or delivering the goods or services sold by a company. In the auto industry, COGS would include the cost of raw materials, labor, and other expenses directly related to manufacturing vehicles.
Gross Profit is calculated by subtracting the COGS from the revenue.
Selling, General, and Administrative (SG&A) expenses represents the costs associated with a company's non-production activities, such as sales, marketing, and administrative functions. In the auto industry, SG&A expenses would include salaries of sales personnel, advertising expenses, rent for office spaces, and other costs related to running the business.
Depreciation & Amortization: Depreciation refers to the systematic allocation of the cost of a tangible asset over its useful life. Amortization, on the other hand, is the process of spreading out the cost of an intangible asset over its useful life. In the auto industry, depreciation and amortization expenses would include the depreciation of manufacturing equipment, vehicles, and amortization of patents or trademarks.
Interest Expenses represents the costs associated with borrowing money or using credit facilities. Interest expenses are incurred when a company has outstanding debt or loans. In the auto industry, interest expenses would include interest paid on loans used to finance manufacturing facilities or purchase equipment.
This PowerPoint presentation is only a small preview of our Toolkits. For more details, visit www.domontconsulting.comCreating an Income Statement with Forecasts: A Simple Guide and Free Excel Te...
Creating an Income Statement with Forecasts: A Simple Guide and Free Excel Te...Aurelien Domont, MBA
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Below is the budgeted income for Satchmo Incorporated for the upcomin.pdf
- 1. Below is the budgeted income for Satchmo Incorporated for the upcoming year including information on machine hours (MH) and sales volume, in units, by product. Management is concerned with the budgeted performance of Product D. Included in the fixed costs assigned to each product line are common fixed costs of $150,000 that are allocated to the products by machine hours. These costs are expected to stay at $150,000 regardless of the firm's decisions on production. The remaining fixed costs assigned to each product are direct fixed costs that can be avoided by dropping a product line. Required (Show and label your work in a professional manner.) 1. By how much will income increase or decrease if the firm drops Product D ? 2. Assume the budgeted 50,000MH is the firm's capacity production. Demand for the firm's products is such that sales of any of the products could be increased by up to 20%. At the prevailing prices. If the firm were to drop product D and increase sales of the other three products. - By how much should the firm increase production of each product: Product A, Product B and Product C? - What income level will the firm achieve by dropping Product D and increasing the level of sales for the other products, according to your calculations?