Victor Inc. has just received its sales and expense report for December, which follows. Item Amount Sales commissions $250,000 Sales staff salaries 100,000 Telephone and mailing 30,000 Building lease payment 60,000 Heat, light, and water 15,000 Packaging and delivery 30,000 Depreciation 25,000 Marketing consultants 10,000 Sales 600,000 You have been asked to develop budgeted costs for the coming year. Since this month is typical, you decide to prepare an estimated budget for a typical month in the coming year and you uncover the following additional data: • Sales volume is expected to increase by 20 percent. • Sales prices are expected to decrease by 10 percent. • Commissions are based on a percentage of selling price. • Sales staff salaries will increase 8 percent next year regardless of sales volume. • Building rent is based on a five-year lease that expires in three years. • Telephone and mailing costs are scheduled to decrease by 5 percent even with no change in sales volume. However, these costs are variable with the number of units sold, as are packaging and delivery costs. • Heat, light, and water are scheduled to increase by 10 percent regardless of sales volume. • Depreciation includes furniture and fixtures used by the sales staff. No additions or retirements are expected. • Marketing consultant expenses were for a special advertising campaign that runs from time to time. During the coming year, the costs are expected to average $15,000 per month. Required: Prepare Victor’s pro-forma operating statement for a typical month in the coming year.
Victor Inc. has just received its sales and expense report for December, which follows. Item Amount Sales commissions $250,000 Sales staff salaries 100,000 Telephone and mailing 30,000 Building lease payment 60,000 Heat, light, and water 15,000 Packaging and delivery 30,000
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