## Week 3 – Part 1

 Week Three Financial Exercises Part 1 Using the table below, describe the types of budgets. In your description, include: • The objective of the budget • How the budget assists an organization in managing its financial activities • What types of data need to be included in that specific budget Type of Budget Description Cash Flow Operating Sales Static Financial

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## Week 3 – Part 2

 Week Three Financial Exercises Part 2 Complete the following problems using the following ratios: Sales level at which operating income is zero o    If sales above breakeven, then profit o    If sales below breakeven, then loss o    Fixed expenses = total contribution margin Total sales = total expenses Break Even Point: Unit Sold = Fixed expenses + Operating Income / Contribution Margin per unit Break Even Point: Sales \$ = Fixed expenses + Operating Income / Contribution Margin Ratio (1) Calculate the break even number of units if the fixed expenses are \$7,000 and the contribution margin is \$14 per unit. Answer: (2) Calculate the break even sales dollars if the fixed expenses are \$7,000 and the contribution ratio is 40%. Answer: (3) Calculate the break even number of units with a target profit of \$120,000 if the fixed expenses are \$15,000 and the contribution margin is \$60 per unit. Answer:

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