Allscott Company Is Developing Its Budgets for 2016 and for the First

question 50

Essay

Allscott Company is developing its budgets for 2016 and for the first time will use the Kaizen approach.The initial 2016 income statement,based on static data from 2015,is as follows:

Selling prices for 2016 are expected to increase by 8%,and sales volume in units will decrease by 10%.The cost of goods sold as estimated by the Kaizen approach will decline by 10% per unit.Other than depreciation,all other operating costs are expected to decline by 5%.
Required:
Prepare a Kaizen-based budgeted income statement for 2016.

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Definitions:

Promissory Note

A promissory note is a financial instrument that contains a written promise by one party to pay another party a determinate sum of money either on demand or at a specified future date.

Compounded Semi-Annually

The method of calculating interest on a principal where the interest is computed twice a year and each interest payment is added to the principal for future calculations.

Discounted Rate

A reduced price or rate from the original cost, typically applied to encourage prompt payment or purchase.

Compounded Annually

Interest on an investment calculated once a year on both the initial principal and the accumulated interest from previous periods.