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Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow: First Quarter Second Quarter Third Quarter Sales revenue Cost of goods sold $ 187,000 (130,900) Gross profit Selling & administrative expenses Net income 56,100 (18,700) $ 37,400 $ 217,000 (151,900) 65,100 (21,700) $ 43,400 $ 227,000 (158,900) Fourth Quarter $ 277,000 68,100 (22,700) (193,900) 83,100 (27,700) Total $ 908,000 (635,600) 272,400 (90,800) $ 45,400 $ 55,400 $ 181,600 Historically, cost of goods sold is about 70 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue. Fred Arvada, the chief executive officer, told Mr. Long that he expected sales next year to be 10 percent for each respective quarter above last year's level. However, Rita Banks, the vice president of sales, told Mr. Long that she believed sales growth would be only 5 percent. Required a. Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada's estimate. b. Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks' estimate. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada's estimate. Sales revenue Cost of goods sold Second First Quarter Quarter Third Quarter Fourth Quarter Total

Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow: First Quarter Second Quarter Third Quarter Sales revenue Cost of goods sold $ 187,000 (130,900) Gross profit Selling & administrative expenses Net income 56,100 (18,700) $ 37,400 $ 217,000 (151,900) 65,100 (21,700) $ 43,400 $ 227,000 (158,900) Fourth Quarter $ 277,000 68,100 (22,700) (193,900) 83,100 (27,700) Total $ 908,000 (635,600) 272,400 (90,800) $ 45,400 $ 55,400 $ 181,600 Historically, cost of goods sold is about 70 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue. Fred Arvada, the chief executive officer, told Mr. Long that he expected sales next year to be 10 percent for each respective quarter above last year's level. However, Rita Banks, the vice president of sales, told Mr. Long that she believed sales growth would be only 5 percent. Required a. Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada's estimate. b. Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks' estimate. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada's estimate. Sales revenue Cost of goods sold Second First Quarter Quarter Third Quarter Fourth Quarter Total

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 18E: Carmichael Corporation is in the process of preparing next years budget. The pro forma income...
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Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow: First Quarter Second Quarter Third Quarter Sales revenue Cost of goods sold $ 187,000 (130,900) Gross profit Selling & administrative expenses Net income 56,100 (18,700) $ 37,400 $ 217,000 (151,900) 65,100 (21,700) $ 43,400 $ 227,000 (158,900) Fourth Quarter $ 277,000 68,100 (22,700) (193,900) 83,100 (27,700) Total $ 908,000 (635,600) 272,400 (90,800) $ 45,400 $ 55,400 $ 181,600 Historically, cost of goods sold is about 70 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue. Fred Arvada, the chief executive officer, told Mr. Long that he expected sales next year to be 10 percent for each respective quarter above last year's level. However, Rita Banks, the vice president of sales, told Mr. Long that she believed sales growth would be only 5 percent. Required a. Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada's estimate. b. Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks' estimate. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada's estimate. Sales revenue Cost of goods sold Second First Quarter Quarter Third Quarter Fourth Quarter Total
Transcribed Image Text:Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow: First Quarter Second Quarter Third Quarter Sales revenue Cost of goods sold $ 187,000 (130,900) Gross profit Selling & administrative expenses Net income 56,100 (18,700) $ 37,400 $ 217,000 (151,900) 65,100 (21,700) $ 43,400 $ 227,000 (158,900) Fourth Quarter $ 277,000 68,100 (22,700) (193,900) 83,100 (27,700) Total $ 908,000 (635,600) 272,400 (90,800) $ 45,400 $ 55,400 $ 181,600 Historically, cost of goods sold is about 70 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue. Fred Arvada, the chief executive officer, told Mr. Long that he expected sales next year to be 10 percent for each respective quarter above last year's level. However, Rita Banks, the vice president of sales, told Mr. Long that she believed sales growth would be only 5 percent. Required a. Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada's estimate. b. Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Banks' estimate. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Arvada's estimate. Sales revenue Cost of goods sold Second First Quarter Quarter Third Quarter Fourth Quarter Total
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