ACC445 P4T1 DB 2-6-07 - Phase 4 Budgeting(DB by...

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Phase 4 Budgeting (DB) by Rodney.JeanBaptiste on 1/5/2007 6:23:39 AM Reply to Message | Reply to Forum | Print | Save | Email Prepare a 2006 master budget for SSOG based on the 2003–2005 actual performances for a presentation about  meeting company goals. Communicate your assumptions and calculations that went into the preparation. In your own words, please post a response to the Discussion Board and comment on other postings. You  will be graded on the quality of your postings. © Copyright 2006 Colorado Technical University Online. All Rights Reserved. Phase 4 Budgeting (DB) by Alice.Hess on 2/3/2007 10:48:52 PM Reply to Message | Reply to Forum | Print | Save | Email   Alice Hess ACC445-0701A-01 Phase 4 DB The most likely case scenario is based on the numbers of the years 2003-2005. As we can notice, the numbers in the master budget are higher than those of actual year 2005. The reason is that it’s always a good idea to add to most probable numbers a bit when budgeting. The reason is when the result is achieved, even if it’s lower than budget numbers, most likely it’s going to be higher than probable numbers were. We assume that the growth in the numbers will continue. That is number of gallons will increase (by about the same amount as in year 2003-2004). We can do that without fearing the market saturation simply because people always drink orange juice and according the original Scenario, we don’t have too much competition, We would also expect the price to the fairly stable (not far from what it was the year before) as well as
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costs should go down a bit. The reason is once again pretty simple – we don’t change the process, therefore there is a lot of expertise in what people do, hence the productivity goes up, while the equipment depreciates, and consequently loses its value. We also assume that we would sell 10,000 gallons less than we would produce for each product line. We set the price to be a bit higher than years before. The reason is there is always inflation. After that we compute the Cost of Goods Sold (COGS) by multiplying the production cost by the number of gallons sold. We also compute the Net Sales by multiplying the price for each product by the quantity of gallons sold. In the Expenses section of the Income Statement we include: - Depreciation - computed by calculating the Direct equipment cost for all the gallons of juice produced divided by 7 (we presume the useful life of equipment to be 7 years) – see the formula in the corresponding cell of the Excel file. - Office and warehouse rent – we assume it’s contractual and doesn’t change from the previous year. -
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ACC445 P4T1 DB 2-6-07 - Phase 4 Budgeting(DB by...

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