Answer the Following Question(s)using the Information Below

question 97

Essay

Answer the following question(s)using the information below.Sherry and John Enterprises are using the Kaizen approach to budgeting for 2019.The budgeted income statement for January 2019 is as follows:
Under the Kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month.
-Jermaine Company is developing its budgets for 2019 and for the first time will use the Kaizen approach.The initial 2019 income statement, based on static data from 2018, is as follows:
Selling prices for 2019 are expected to increase by 8 percent, and sales volume in units will decrease by 10 percent.The cost of goods sold as estimated by the Kaizen approach will decline by 10 percent per unit.Other than amortization, all other operating costs are expected to decline by 5 percent.Required:
Prepare a Kaizen-based budgeted income statement for 2019.

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Definitions:

Future Cash Flows

Projected financial gains or losses for a specific period in the future.

Financial Advisors

Professionals who help individuals manage their finances by providing advice on money issues such as investments, insurance, mortgages, college savings, estate planning, taxes, and retirement.

Collateral

Assets that a borrower offers to a lender as security for a loan, which can be seized if the loan is not repaid according to the agreed upon terms.

Cash Flows

The full extent of money transactions processed by a business, considerably affecting its ability to liquidate assets.