1.Develop a new budget based on how the ideal profit and loss statement should look if it reflects the president's bottom-line objective for ZCT. Justify your expenses for each of the five budgeted expense areas. SALES$12,000,000
Service+ 400,000- 11,000,000
•Sales- $1,000,000 in extra sales should be achieved by normal 10% growth. Another $1,000,000 can be gained by adding four sales reps at a cost of $300,000. Therefore, add $300,000 to last year's expense to get new budget goal of $1,800,000.
•Administration- Eliminating three clerical jobs will reduce the clerical overhead by one-fourth, or $50,000, bringing next year's goal down to $450,000.
•Production- Last year's expense ($6,000,000) is increased by cost of new production line $400,000; $125,000; $325,000; a total of $850,000 making the new budget goal $6,850,000.
•Service- A target ratio of 3-1 (sales-service), with a projected sales force of 24 means three new service reps at a total cost of $120,000. Add $30,000 for tools and budget goal is $400,000.
2. What would be the net profit if sales: