- 10 Marks
MA – Mar 2023 – L2 – Q3b – Budgeting
Prepare a budgeted income statement for AJ Ltd based on given projections and assumptions for 2023.
Question
The Income Statement of AJ Ltd for the year ended December 2022 was as follows:
Projections for 2023:
Sales: The current sales represent 15% of market share. Management plans to increase this to 20%. Meanwhile, industry experts are projecting a 12% growth in the sector.
Cost of Sales: Improvement in material quality will reduce cost of sales by 5% from the current level.
Other Expenses:
i) Administrative costs will increase by 20% over the 2022 actual figure.
ii) Selling and distribution costs will increase by 18% over the 2022 actual figure.
iii) Finance costs will remain at the same percentage of sales revenue as in 2022.
Required:
Prepare the budgeted income statement for the year 2023.
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