Cost Concepts: Cost-Volume-Profit-Analysis
Compose a memo to the client discussing the benefits of a budget. Include information regarding static budgets, as well as flexible budgets, and the differences between the two. In Part II of this assignment, you will prepare a static budget for the client. Also, include your rationale for each decision (step) that you make for the budget that you will prepare.
Using the 2016 and 2017 financial statements provided for Jim’s Auto Body, prepare a static budget for 2018 (include the Income Statement and the Balance Sheet). Jim Davis has indicated that his plan is to grow his revenue by 15%. Prepare the static budget based on this growth plan and the previous year’s statements to account for trends. Do not be afraid to make suggestions for the budget (such as suggesting a way to cut back on utilities or supplies) to show the client how much of a difference it could make in his profitability. Please show your work (calculations). Your memo should be 700–900 words in APA format.