Project 4
1. Project 4
1.13. Page 3
Project 4: Budgeting
Time to Practise
Practice 1
Step 1: Open Comparative Income Statement Template, and save it in your course folder.
Step 2: Using the budgeted income statement below, complete a comparative income statement for Koch Moving and Storage.
Microsoft product screen shot(s) reprinted with permission from Microsoft Corporation.
Microsoft product screen shot(s) reprinted with permission from Microsoft Corporation.
Step 3: Refer to the comparative income statement, and analyze this statement by answering the following questions.
- This company had a substantial increase in advertising expenses. Why was the company still able to maintain a net income?
A total of $5000.00 more was generated in revenue than projected, and truck expenses were less than projected. This allowed a $3000.00 overall net income.
- Why do you think the actual amount the company had allowed for truck expenses was less than what had been budgeted for?
Koch Moving may have been anticipated a major repair that wasn’t necessary or the company’s drivers were not driving as much and didn’t need to spend as much on gas and other maintenance for the truck.
- Do you think this company should spend less on advertising? Why or why not?
Although Koch Moving had an increase in advertising expenses, the company also had an increase in revenue. This could have been a result of more advertising. The company would have to analyze where the total revenue was generated and make a decision about whether advertising costs should be reduced. The answer could be yes or no.
If more advertising means more sales, the company should not decrease advertising.
If the sales weren’t generated through the advertising, then the company should decrease advertising.