ACC445 P4T1 DB 2-6-07

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

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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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This note was uploaded on 11/05/2011 for the course ACCOUNTING 101 taught by Professor Online during the Spring '11 term at Colorado Technical University.

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

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