Brad Corporation Is Developing Its Budgets for 2016 and for the First

question 147

Essay

Brad Corporation 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:

Under the Kaizen approach,cost of goods sold and variable operating expenses are budgeted to decline by 12%.
Required:
Prepare a Kaizen-based budgeted income statement for March of 2016.

---

Definitions:

Merchandise Purchases

The procurement of goods for resale, typically in a retail or wholesale environment, not involving the manufacturing process.

Merchandise Inventory

The goods a company holds for the purpose of sale to customers.

Cost of Goods Sold

The total cost associated with making or buying the products that a company has sold during a period.

Indirect Manufacturing Cost

Costs in the production process that cannot be directly traced to specific units of product, such as maintenance and facility costs.