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Problem 1: Prepare an operating budget for one of CompuTech's departments for 2014. The operating results for 2013 for this department are as follows:
Revenue $32,400
Cost of sales (21,600)
Gross profit 10,800
Salaries (8,000)
Profit $ 2,800
In 2013, the department sold 5,400 units and the retail sales price per unit was $6.00. The purchase price per unit was $4.00. A portion of the salaries, $8,000, was allocated to that department. Both the controller and the sales manager made planning assumptions for the 2014 budget year. They projected a 6% increase in the number of units to be sold and that both the selling price cost of sales would increase by 2%. Salaries will show an 8% increase.
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